2005 Stock Option Plan of the registrant


    

      Exhibit
        10.18

      


      Magnetech
        Integrated Services Corp.

       

      2005
        STOCK
        OPTION
        PLAN

       

      1. Purpose.
        The
        purpose of the Magnetech Integrated Services Corp. 2005 Stock Option Plan
        (the
“Plan”) is to provide certain key executives of Magnetech Integrated Services
        Corp. (the “Corporation”) and/or any of its subsidiaries (collectively,
“Magnetech”), all of whom are instrumental in the management and operation of
        the business of Magnetech, an opportunity to acquire shares of the common
        stock
        of the Corporation (“Common Stock”), thereby providing them with an increased
        incentive to work for the success of Magnetech and to enable Magnetech to
        attract and retain capable key executives. An executive officer may acquire
        shares of Common Stock by exercising one or more options to acquire Common
        Stock
        (each, an “Option”) granted to such executive officer in accordance with this
        Plan. It is intended that Options issued pursuant to this Plan shall constitute
        either: (a) a qualified Incentive Stock Option (“ISO”) within the meaning
§ 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or (b)
        a non-qualified Stock Option (“NQSO”) which will include all other Options
        issued under this Plan that do not qualify as an ISO under § 422 of the Code. An
        NQSO (but not an ISO) may be issued to a member of the Corporation’s Board of
        Directors to the extent provided herein.

       

      2. 
        Administration of the Plan.
        The
        Plan shall be administered by the Corporation’s Board of Directors (“Board”) or
        by a Committee of Directors appointed by the Board to administer the Plan
        (the
“Committee”). As used herein, the term “Board” shall be understood to refer to
        the Board if no Committee has been appointed, or shall be understood to refer
        to
        the Committee if the Board has appointed a Committee to administer the Plan.
        The
        Board may act either at a meeting at which a majority of the members of the
        Board are present or by a written consent signed by all members of the Board.
        The Board shall have the sole and conclusive authority to determine, consistent
        with and subject to the provisions of the Plan:

       

      (a) the
        employees (and/or members of the Board for NQSO’s) to whom Options may be
        granted;

       

      (b) whether
        the Option granted is an ISO or a NQSO (Board members may only receive
        NQSO’s);

       

      (c) the
        date
        when an Option shall be granted hereunder;

       

      (d) the
        number of shares of Common Stock subject to, and the expiration date of any
        Option, which expiration date shall not exceed five (5) years from the date
        of
        grant;

       

      (e) the
        manner, time and rate (cumulative or otherwise) of exercise of each
        Option;

       


      
        
          
          

        

        
          
            

          

        

        
          
          

        

      


      (f) the
        price
        to be paid per share of Common Stock upon the exercise of each Option (the
        “Exercise Price”), which shall not be less than the fair market value of such
        Common Stock on the date such Option is granted; and

       

      (g) the
        terms
        and conditions of the respective agreements by which Options shall be
        evidenced.

       

      The
        Board
        shall also have authority to prescribe, amend and rescind rules and regulations
        relating to the Plan and to make all other determinations necessary or advisable
        for the implementation and administration of the Plan.

       

      3. Eligibility.
        The
        Board, consistent with the purposes of the Plan, may grant (a) NQSO’s to one or
        more Members of the Board, and (b) ISO’s and/or NQSO’s to executive employees of
        Magnetech, who in the Board’s discretion, are materially responsible for the
        management and operation of the business of Magnetech (each, an “Optionee”).
        Subject to the provisions of Section
        5
        hereof,
        an individual who has been granted an Option under the Plan, if he or she
        is
        otherwise eligible, may be granted an additional Option or Options if the
        Board
        shall so determine.

       

      4. Stock
        Subject to the Plan.
        There
        shall be reserved for issuance upon the exercise of Options granted under
        the
        Plan, two million (2,000,000) shares of Common Stock, which may be either
        authorized but unissued shares of the Corporation, or issued shares heretofore
        or hereafter reacquired by the Corporation and held as treasury shares. Subject
        to Section
        7
        hereof,
        the number of shares for which Options may be granted under the Plan shall
        not
        exceed the number of shares set forth in this Section. If any Option expires
        or
        terminates for any reason without having been exercised in full, the shares
        subject thereto (which have not been purchased) shall become available for
        other
        Options under the Plan, unless the Plan has terminated.

       

      5. General
        Terms and Conditions of Option.
        Each
        Option granted under the Plan shall be subject to the following terms and
        conditions and to such other terms and conditions not inconsistent therewith
        as
        the Board may deem appropriate in each case:

       

      (a) Type
        of Option.
        Each
        Option shall indicate whether it is intended to be an ISO or a NQSO. Employees
        may receive an ISO or a NQSO; Board Members may only receive a NQSO. To the
        extent it is designated as an ISO, it is understood that all requirements
        of the
        Code in order to qualify the Option as an ISO must be met.

       

      (b) Option
        Price.
        Each
        Option shall state an Exercise Price, which shall be not less than 100% of
        the
        fair market value of the shares of Common Stock of the Corporation on the
        date
        of the granting of the Option. With respect to each Option that is an ISO,
        in no
        event may any person who owns (after application of the ownership rules in
        Section 424(d) of the Code) more than 10% of the total combined voting
        power of all classes of Common Stock of the Corporation be granted an ISO
        hereunder unless at the time such ISO is granted the Exercise Price is at
        least
        110% of the fair market value of the Common Stock subject to the
        ISO.

       


      
        
          
          

        

        
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      (c) Term
        of Option.
        An
        Option shall not be exercisable after the expiration of such period as shall
        be
        fixed by the Board at the time such Option is granted, and in no event, shall
        such period exceed five (5) years from the date on which such Option is
        granted.

       

      (d) Payment
        of Exercise Price.
        The
        Exercise Price for each share of Common Stock purchased upon exercise of
        an
        Option shall be paid in full in cash at the time of such exercise, unless
        the
        Board specifically agrees to another form or term for payment (with respect
        to
        any ISO, payment terms must comply with the requirements of Section 422 of
        the
        Code). The Board shall have the authority to grant Options exercisable in
        full
        at any time during their term, or exercisable in such installments, equal
        or
        non-equal, as the Board shall determine.

       

      (e) Termination
        of Option.
        

       

      (i) Employee
        Optionees.
        If an
        Employee Optionee prior to age 65 terminates his or her employment with
        Magnetech for any reason other than death, “Disability” or “Good Reason” (as
        defined in 5(k) below), or is involuntarily terminated by Magnetech for “Cause”
        (as defined in 5(k) below), any Options held by such Optionee and not exercised
        as of the date immediately preceding such date of termination shall be deemed
        canceled and no longer exercisable. A leave of absence approved by the Board
        shall not constitute cessation of employment. In the event of termination
        of an
        Employee Optionee’s employment: (i) by the Optionee for Good Reason, (ii) by
        Magnetech without Cause, (iii) after attaining age 65, or (iv) due to death,
        the
        Optionee shall have a three (3) month period after termination to exercise
        the
        Option as provided in Section 6(c) hereof; in the event of termination due
        to
        Disability the Optionee shall have one (1) year following termination of
        employment to exercise the Option as provided in Section 6(c)
        hereof.

       

      (ii) Board
        Member Optionees.
        If the
        Board or the shareholders of the Corporation remove a Board Member Optionee
        prior to the end of his or her term for any reason that the Board or
        shareholders determine to be actions or omissions by the Board Member that
        were
        materially detrimental to the Corporation and/or constituted a failure by
        the
        Board Member to perform his or her duties to the Corporation in accordance
        with
        the standards of conduct set forth in Ind.
        Code§
        23-1-35-1, then any unexercised Options held by such Optionee as of the date
        immediately preceding the effective date of such removal from the Board shall
        be
        deemed cancelled and no longer exercisable; a termination for the reasons
        set
        forth in this sentence shall be referred to herein as a “Malfeasance
        Termination”. In the event of termination of a Board Member Optionee’s service
        on the Board for any reason other than a Malfeasance Termination, the Board
        Member 

       


      
        
          
          

        

        
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      Optionee
        shall have a three month period after termination as a Board Member to exercise
        the Option as provided in Section 6(c) hereof.

       

      (f) Nontransferability
        of Option.
        An
        Option under this Plan may not be transferred by the Optionee otherwise than
        by
        will or the laws of descent and distribution, except that an option may be
        transferred by the Optionee to a revocable trust, or any other trust qualifying
        as a “grantor trust” under Sections 671-677 of the Code, to be held during the
        lifetime of the Optionee for his or her benefit. During the lifetime of the
        Optionee an Option shall be exercised only by the Optionee under this
        Plan.

       

      (g) Investment
        Representations.
        Unless
        the transfer of shares of Common Stock subject to an Option is registered
        under
        applicable federal and state securities laws, by accepting an Option, each
        Optionee shall be deemed to agree that any Option granted to the Optionee
        and
        any and all shares of Common Stock purchased upon the exercise of the Option
        shall be acquired for investment and not with a view to, or for the sale
        in
        connection with, any distribution thereof, and each notice of the exercise
        of
        any portion of an Option shall be accompanied by a representation in writing,
        signed by the Optionee or the Optionee’s legal representatives, as the case may
        be, that the shares of Common Stock are being acquired in good faith for
        investment and not with a view to, or for sale in connection with, any
        distribution thereof (except in case of the Optionee’s legal representatives for
        distribution, but not for sale, to the Optionee’s legal heirs, legatees and
        other testamentary beneficiaries). Any shares issued pursuant to an exercise
        of
        an option will bear a legend evidencing such representations and
        restrictions.

       

      (h) Maximum
        ISOs.
        The
        aggregate fair market value (determined as of the time the Option is granted)
        of
        Common Stock subject to ISOs that are exercisable for the first time by an
        employee during any calendar year under the Plan or any other plan of Magnetech
        shall not exceed $100,000. For this purpose, the fair market value of such
        shares shall be determined as of the date the Option is granted and shall
        be
        computed in such manner as shall be determined by the Board, consistent with
        the
        requirements of Section 422 of the Code. If the immediate exercisability
        of
        ISOs arising from the death or Disability of an Optionee or liquidation or
        merger of the Corporation (or any other event under this Plan that causes
        an ISO
        to be immediately exercisable) would cause this $100,000 limitation to be
        exceeded for an Optionee, such ISOs shall automatically be converted into
        NQSOs
        as of the date on which such ISOs become exercisable but only to the extent
        necessary to comply with the $100,000 limitation.

       

      (i) Agreement.
        Each
        Option shall be evidenced by an agreement (“Option Agreement”) between the
        Optionee and the Corporation. With respect to ISOs, the Optionee generally
        may
        not sell or transfer the shares of Common Stock received upon exercise of
        the
        Option to the extent such sale or transfer takes place prior to the later
        of (a)
        two (2) years from the date of grant of the Option or (b) one (1) year from
        the
        date of exercise of the Option. The Option Agreement shall include the


       


      
        
          
          

        

        
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      Option
        term and exercise conditions, in addition to such other terms, conditions
        and
        restrictions which the Board, in its discretion, deems appropriate.

       

      (j) Certificates.
        The
        certificate or certificates for the shares issuable upon an exercise of an
        Option shall be issued as promptly as practicable after such exercise. An
        Optionee shall not have any rights of a shareholder in respect to the shares
        of
        Common Stock subject to an Option until the date of issuance of a stock
        certificate for such shares. In no case may a fraction of a share be purchased
        or issued under the Plan, but if, upon the exercise of an Option, a fractional
        share would otherwise be issuable, the Corporation shall pay cash in lieu
        thereof.

       

      (k) Definitions.

       

      (i) Termination
        for “Cause” shall be defined as termination of employment of the Optionee by
        Magnetech for any of the following reasons:

       

      (a) Optionee’s
        conviction of any felony (whether or not involving Magnetech) which constitutes
        a crime of moral turpitude or which is punishable by imprisonment in a state
        or
        federal correction facility;

       

      (b) Actions
        by Optionee involving willful malfeasance or gross negligence;

       

      (c) Optionee’s
        commission of an act of fraud or dishonesty, whether prior or subsequent
        to the
        date hereof, upon Magnetech;

       

      (d) Optionee’s
        failure to perform his duties as an employee to the reasonable satisfaction
        of
        the Board or other material breach of the terms and conditions of his
        employment; provided that termination of Optionee’s employment pursuant to this
        subparagraph (d) shall not constitute valid termination for “Cause” unless
        Optionee shall have first received written notice from Magnetech stating
        the
        nature of the material breach, failure or refusal and affording Optionee
        at
        least ten (10) days to correct such breach, failure or refusal to the
        satisfaction of the Board; or

       

      (e) Optionee’s
        willful violation of any reasonable rule or regulation applicable to all
        senior
        executives if such violation is not cured to the satisfaction of the Board
        promptly following notice to Optionee.

       

      (ii) The
        term
“Disability” shall mean a mental or physical condition which, in the opinion of
        a licensed physician selected by the 

       


      
        
          
          

        

        
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      Board,
        prevents the Optionee from engaging in the principal duties of his or her
        employment with Magnetech and is either: (a) a permanent disability that
        is
        likely to result in the death of the Optionee, or (b) a disability that has
        continued for at least 6 months and which is likely to continue for a lengthy
        or
        indefinite period.

       

      (iii) “Good
        Reason” means termination of employment by an Optionee due to one of the
        following: (a) the failure of Magnetech to pay any amount due to Optionee
        as an
        employee, which failure persists for fifteen (15) days after written notice
        of
        such failure has been received by Magnetech; (b) any material reduction in
        Optionee’s title or a material reduction in Optionee’s duties or
        responsibilities (unless such reduction is for Cause); (c) any material adverse
        change in Optionee’s base salary (unless such reduction is for Cause) and/or any
        material adverse change in Optionee’s benefits (other than changes that affect
        other management employees of Magnetech to the same or comparable extent);
        (d)
        any relocation of the premises at which Optionee works to a location more
        than
        25 miles from such location, without Optionee’s consent; or (e) Magnetech’s
        material breach of any written employment agreement between Optionee and
        Magnetech, which breach has not been cured within 15 days of written notice
        from
        Optionee specifying in reasonable detail the nature of such breach.

       

      (l) No
        Right to Continued Service.
        Nothing
        in the Plan or in any agreement entered into pursuant hereto shall confer
        on any
        person any right to continue in the employ of Magnetech or affect any rights
        Magnetech may have to terminate the Optionee’s service at any time.

       

      6. Exercise
        of Options.

       

      (a) Except
        as
        otherwise provided in Section 6(c), an Option granted under the Plan shall
        be
        exercisable only during the lifetime of the Optionee to whom such Option
        was
        granted and only by the Optionee; provided that the Optionee has maintained
        Continuous Service with Magnetech since the date of grant of such Option.
        For
        purposes of this Section 6, the term “Continuous Service” means the absence of
        any interruption or termination of service as an officer or employee of
        Magnetech. Service shall not be considered interrupted in the case of sick
        leave, military leave or any other leave of absence approved by the
        Board.

       

      (b) To
        exercise an Option under the Plan, the Optionee to whom such Option was granted
        shall give written notice to the Corporation in a form satisfactory to the
        Board
        (and, if partial exercises have been permitted by the Board, by specifying
        the
        number of shares of Common Stock with respect to which the Optionee elects
        to
        exercise such Option) together with full payment of the Exercise Price to
        the
        extent required under Section
        5(d) of
        this
        Plan and/or under the Option Agreement. The date of exercise shall be on
        the
        date on which such notice is actually received by the Corporation.

       


      
        
          
          

        

        
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      (c) In
        the
        event of a Board Member Optionee’s Board service termination for reasons other
        than Malfeasance Termination, or the termination of an Employee Optionee’s
        employment: (i) by the Optionee for Good Reason, (ii) by Magnetech without
        Cause, (iii) after attaining age 65, or (iv) due to death, any Options held
        by
        such terminated Board member or terminated employee shall be considered fully
        exercisable by the Optionee, or the person to whom any Option held by the
        Optionee at the time of his death is transferred by will or the laws of descent
        and distribution, within the three (3) month period immediately following
        the
        date of termination of service as a Board Member or termination of employment,
        whichever applies (but in no event later than the period fixed by the Board
        in
        accordance with Section
        5(c) above),
        unless the Option provides otherwise. In the event of termination of employment
        due to Disability, the period of exercise will continue until twelve (12)
        months
        after termination of employment for Disability. Notwithstanding anything
        contained herein to the contrary, the Board, in its sole discretion, may
        redeem
        any Options of a deceased or disabled Optionee, or upon the Retirement of
        an
        Optionee, by paying to the Optionee or the Optionee’s personal representative,
        an amount equal to the difference between the option price and the then fair
        market value of the Common Stock (as determined in accordance with Section
        422
        of the Code with respect to an ISO).

       

      (d) Subject
        to the express provisions of the Plan, and within the limitation of the Plan,
        the Board may modify, extend or renew outstanding Options or accept the
        surrender of outstanding Options and authorize the granting of new Options
        in
        substitution therefor. However, no modification of an Option shall impair
        the
        rights of the holder thereof without his or her consent. The Board may not
        decrease directly or indirectly (by cancellation or substitution of Options
        or
        otherwise) the Exercise Price applicable to any Option; however, this
        prohibition shall not prevent the granting of an additional Option to a person
        holding an earlier Option which is exercisable at a higher Exercise
        Price.

       

      7. Adjustment
        of Shares.
        In the
        event of any change after the effective date of the Plan in the outstanding
        shares of stock of the Corporation by reason of any reorganization,
        recapitalization, stock split, stock dividend, combination of shares, exchange
        of shares, merger or consolidation, liquidation, or any other change after
        the
        effective date of the Plan in the nature of the shares of stock of the
        Corporation, the Board shall determine what changes, if any, are appropriate
        in
        the number and kind of shares of stock reserved under the Plan, in the number
        of
        shares which may be issued to any individual in any calendar year and in
        the
        option price under and the number and kind of shares of stock covered by
        outstanding Options granted under the Plan. Any determination of the Board
        hereunder shall be conclusive.

       

      8. Change
        in Control.
        Notwithstanding anything to the contrary herein, or in any Option Agreement,
        upon a Change in Control all Options granted under this Plan prior to said
        date
        shall be immediately exercisable in full, and any Optionee employed as of
        said
        date may exercise such Options for a period of 30 days after said date
        regardless of 

       


      
        
          
          

        

        
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      whether
        the Optionee’s employment with Magnetech is terminated. A Change in Control
        shall be deemed to have occurred upon the happening of any of the
        following:

       

      (a) the
        consummation of a plan of merger or consolidation of the Corporation with
        any
        other entity as a result of which the holders of the voting capital stock
        of the
        Corporation receive less than 50 percent of the voting capital stock of the
        surviving or resulting entity;

       

      (b) the
        sale,
        lease, exchange or other transfer (in one transaction or a series of
        transactions contemplated or arranged by any party as a single plan) of all
        or
        substantially all of the assets of the Corporation; or 

       

      (c) the
        approval by the shareholders of the Corporation of any plan or proposal for
        the
        liquidation or dissolution of the Corporation.

       

      9. Effect
        of Sale or Merger on Options.
        In the
        case of any merger, sale, or other combination where the Corporation does
        not
        survive as a continuing entity, the Corporation will (to the extent feasible)
        give notice to each Optionee promptly after a definitive agreement of merger,
        sale or other combination is reached between the Corporation and any third
        party. To the extent the transaction takes place and the Corporation does
        not
        survive, all Options shall become immediately exercisable effective on or
        before
        the day immediately before the date of merger, sale or other combination
        occurs
        or such earlier date as is specified by the Board. Failure to exercise any
        Option on or before the date any transaction takes place in which the
        Corporation does not survive, will result in cancellation of any unexercised
        Options as of the date of such transaction unless otherwise agreed to by
        the
        Board and the third party which is the surviving entity after any such merger,
        sale or other combination.

       

      10. Amendment.
        The
        Board of Directors of the Corporation may amend the Plan from time to time,
        except that without the approval of the Corporation’s shareholders:

       

      (a) the
        number of shares of Common Stock which may be reserved for issuance under
        the
        Plan may not be increased except as provided in Section
        7
        hereof;
        and

       

      (b) the
        period during which an Option may be exercised may not be extended beyond
        ten
        (10) years from the date on which such Option was granted.

       

      No
        amendment of the Plan may, without the consent of the Optionee, make any
        changes
        in any outstanding Option theretofore granted under the Plan which would
        adversely affect the rights of such Optionee.

       

      11. Termination.
        The
        Board of Directors of the Corporation may terminate the Plan at any time,
        and no
        Option shall be granted thereafter. Such termination, however, shall not
        affect
        the validity of any Option theretofore granted under the Plan. In any


       


      
        
          
          

        

        
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      event,
        no
        incentive stock option may be granted after the conclusion of a five (5)
        year
        period commencing on the date the Plan becomes effective.

       

      12. Indemnification
        of Board.
        In
        addition to such other rights of indemnification as they may have as directors,
        the members of the Board shall be indemnified by the Corporation against
        the
        reasonable expenses, including attorneys’ fees actually and necessarily incurred
        in connection with the defense of any action, suit or proceeding, or in
        connection with any appeal therein, to which they or any of them may be a
        party
        by reason of any action taken or failure to act under or in connection with
        the
        Plan or any option granted thereunder, and against all amounts paid by them
        in
        settlement thereof (provided such settlement is approved by independent legal
        counsel selected by the Corporation) or paid by them in satisfaction of a
        judgment in any such action, suit or proceeding, except in relation to matters
        as to which it shall be adjudged in such action, suit or proceeding that
        such
        Board member is liable for negligence or misconduct in the performance of
        his
        duties; provided that within 60 days after institution of any such action,
        suit
        or proceeding a Board member shall in writing offer the Corporation the
        opportunity at its own expense, to handle and defend the same.

       

      13. Application
        of Funds.
        The
        proceeds received by the Corporation from the sale of Common Stock issued
        upon
        exercise of Options under the Plan will be used for general corporate
        purposes.

       

      14. No
        Obligation to Exercise Option.
        The
        granting of an Option shall impose no obligation upon the Optionee to exercise
        such Option.

       

      15. 
        Successors.
        The
        Plan shall be binding upon the successors and assigns of the
        Corporation.

       

      16. Governing
        Law.
        Except
        to the extent governed by federal law, the terms of Options and the rights
        and
        obligations of the Corporation, each Optionee and their successors in interest
        hereunder, shall be governed by Indiana law without regard to conflict of
        law
        rules.

       

      17. Government
        and Other Regulations.
        The
        obligations of the Corporation to issue or transfer and deliver shares under
        Options granted under the Plan shall be subject to compliance with all
        applicable laws, governmental rules and regulations, and administrative
        action.

       

      18. Effective
        Date.
        The
        Plan shall become effective when it shall have been approved by the
        Corporation’s Board of Directors; provided that the shareholders also approve
        such plan within twelve (12) months after the Board of Directors adopts the
        Plan.

       

      19. Shareholder
        Agreement.
        The
        Board may require Optionees to execute a form of shareholder agreement that
        restricts the rights of the Optionee to sell, assign, pledge or otherwise
        transfer shares acquired pursuant to the exercise of such Option and gives
        the
        Corporation an option or the obligation to purchase, for fair market value,
        any


       


      
        
          
          

        

        
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      shares
        owned or acquired by an Optionee after he or she ceases to be employed by
        the
        Corporation.

       

      Adopted
        Effective September
        1,
        2005

       

      


       

      
        	 	
                MAGNETECH
                  INTEGRATED SERVICES CORP.

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                John A. Martell


      

      


      


      


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