EXHIBIT 10.2
INDUSTRIAL HOLDINGS, INC.
INCENTIVE STOCK OPTION AGREEMENT
Optionee: __________________
1. GRANT OF STOCK OPTION. As of the GRANT DATE (identified in Section 19
below), Industrial Holdings, Inc., a Texas corporation (the "COMPANY"), hereby
grants an Incentive Stock Option (the "OPTION") to the OPTIONEE (identified
above), an employee of the Company, to purchase the number of shares of the
Company's common stock, $.01 par value per share (the "COMMON STOCK"),
identified in Section 19 below (the "SHARES"), subject to the terms and
conditions of this agreement (the "AGREEMENT") and the Industrial Holdings, Inc.
1998 Incentive Plan (the "PLAN") which is hereby incorporated herein in its
entirety by reference. The Shares, when issued to Optionee upon the exercise of
the Option, shall be fully paid and nonassessable. The Option is an "incentive
stock option" as defined in Section 422 of the Internal Revenue Code.
2. DEFINITIONS. All capitalized terms used herein shall have the meanings
set forth in the Plan unless otherwise provided herein. Section 19 below sets
forth meanings for various capitalized terms used in this Agreement.
3. OPTION TERM. The Option shall commence on the Grant Date (identified in
Section 19 below) and terminate on the date immediately prior to the tenth
(10th) anniversary of the Grant Date. The period during which the Option is in
effect and may be exercised is referred to herein as the "OPTION PERIOD".
4. OPTION PRICE. The Option Price per Share is identified in Section 19
below. The Option Price shall not be less than the fair market value per Share
on the date of Grant.
5. VESTING. The total number of Shares subject to this Option shall vest
in accordance with the VESTING SCHEDULE (identified in Section 19 below). The
Shares may be purchased at any time after they become vested, in whole or in
part, during the Option Period; provided, however, the Option may only be
exercisable to acquire whole Shares. The right of exercise provided herein shall
be cumulative so that if the Option is not exercised to the maximum extent
permissible after vesting, the vested portion of the Option shall be
exercisable, in whole or in part, at any time during the Option Period.
6. METHOD OF EXERCISE. The Option is exercisable by delivery of a written
notice to the attention of the Secretary of the Company, signed by the Optionee,
specifying the number of Shares to be acquired on, and the effective date of,
such exercise. The Optionee may withdraw notice of exercise of this Option, in
writing, at any time prior to the close of business on the business day
preceding the proposed exercise date.
7. METHOD OF PAYMENT. The Option Price upon exercise of the Option shall
be payable to the Company in full either: (i) in cash or its equivalent, or (ii)
subject to prior approval by the
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Committee in its discretion, by tendering previously acquired Shares having an
aggregate Fair Market Value (as defined in the Plan) at the time of exercise
equal to the total Option Price (provided that the Shares must have been held by
the Optionee for at least six (6) months prior to their tender to satisfy the
Option Price), or (iii) subject to prior approval by the Committee in its
discretion, by withholding Shares which otherwise would be acquired on exercise
having an aggregate Fair Market Value at the time of exercise equal to the total
Option Price, or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above. Any payment in
shares of Common Stock shall be effected by the delivery of such shares to the
Secretary of the Company, duly endorsed in blank or accompanied by stock powers
duly executed in blank, together with any other documents as the Secretary may
require. If the payment of the Option Price is remitted partly in Shares, the
balance of the payment of the Option Price shall be paid in either cash,
certified check, bank cashiers' check, or by wire transfer.
The Committee, in its discretion, may allow (i) a "cashless exercise" as
permitted under Federal Reserve Board's Regulation T, 12 CFR Part 220 (or its
successor), and subject to applicable securities law restrictions and tax
withholdings, or (ii) any other means of exercise which the Committee, in its
discretion, determines to be consistent with the Plan's purpose and applicable
law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to or on behalf of the Optionee, in
the name of the Optionee or other appropriate recipient, Share certificates for
the number of Shares purchased under the Option. Such delivery shall be effected
for all purposes when a stock transfer agent of the Company shall have deposited
such certificates in the United States mail, addressed to Optionee or other
appropriate recipient.
8. RESTRICTIONS ON EXERCISE. The Option may not be exercised if the
issuance of such Shares or the method of payment of the consideration for such
Shares would constitute a violation of any applicable federal or state
securities or other laws or regulations, including any rule under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by
the Federal Reserve Board, or any rules or regulations of any stock exchange on
which the Common Stock may be listed.
9. TERMINATION OF EMPLOYMENT. Voluntary or involuntary termination of
Employment and the death or Disability of Optionee shall affect Optionee's
rights under the Option as follows:
(a) TERMINATION FOR CAUSE. The vested and non-vested portions of the
Option shall expire on 12:01 a.m. (CST) on the date of termination of
Employment and shall not be exercisable to any extent if Optionee's
Employment with the Company is terminated for Cause (as defined in the
Plan at the time of such termination of Employment).
(b) OTHER INVOLUNTARY TERMINATION OR VOLUNTARY TERMINATION. If
Optionee's Employment with the Company is terminated for any reason other
than for Cause, death or Disability (as defined in the Plan at the time of
termination of Employment), then (i) the non-vested portion of the Option
shall immediately expire on the termination date and (ii) the vested
portion of the Option shall expire to the extent not exercised within 90
calendar days
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after the date of such termination of Employment. In no event may the
Option be exercised by anyone after the earlier of (i) the expiration of
the Option Period or (ii) 90 calendar days after termination of
Employment.
(c) DEATH OR DISABILITY. If Optionee's Employment with the Company
is terminated by death or Disability, then (i) the non-vested portion of
the Option shall immediately expire on the date of termination of
Employment and (ii) the vested portion of the Option shall expire 365
calendar days after the date of such termination of Employment to the
extent not exercised by Optionee or, in the case of death, by the person
or persons to whom Optionee's rights under the Option have passed by will
or by the laws of descent and distribution or, in the case of Disability,
by Optionee's legal representative. In no event may the Option be
exercised by anyone after the earlier of (i) the expiration of the Option
Period or (ii) 365 days after Optionee's death or termination of
Employment due to Disability.
10. QUALIFICATION AS AN INCENTIVE STOCK OPTION. The Optionee understands
that the Option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code. The Optionee must meet certain holding
periods under Section 422(a) of the Code to obtain the federal income tax
treatment applicable to the exercise of incentive stock options and the
disposition of shares acquired thereby. The Optionee further understands that
the exercise price of Shares subject to this Option has been set by the
Committee at a price that the Committee determined to be not less than 100% (or,
if the Optionee, at the Grant Date, owned more than 10% of the total combined
voting power of the Company's outstanding voting securities, 110%) of the Fair
Market Value, as determined in accordance with the Plan, of a share of Common
Stock on the Grant Date. The Optionee further understands and agrees, however,
that the Company shall not be liable or responsible for any additional tax
liability incurred by the Optionee in the event that the Internal Revenue
Service for any reason determines that this Option does not qualify as an
"incentive stock option" within the meaning of the Code.
11. INDEPENDENT LEGAL AND TAX ADVICE. Optionee acknowledges that the
Company has advised Optionee to obtain independent legal and tax advice
regarding the grant and exercise of the Option and the disposition of any Shares
acquired thereby.
12. REORGANIZATION OF COMPANY. The existence of the Option shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Shares or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
In the event of a "Change in Control" of the Company (as defined in the
Plan at the time of such event), vesting of the Option may be accelerated and
the Option shall otherwise be affected as provided in the Plan at such time.
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13. ADJUSTMENT OF SHARES. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving
Company, appropriate adjustments shall be made to the terms and provisions of
this Option as provided in the Plan.
14. NO RIGHTS IN SHARES. Optionee shall have no rights as a stockholder in
respect of the Shares until the Optionee becomes the record holder of such
Shares.
15. INVESTMENT REPRESENTATION. Optionee will enter into such written
representations, warranties and agreements as Company may reasonably request in
order to comply with any federal or state securities law. Moreover, any stock
certificate for any Shares issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Shares
hereunder to comply with any law, rule or regulation that applies to the Shares
subject to the Option.
16. NO GUARANTEE OF EMPLOYMENT. The Option shall not confer upon Optionee
any right to continued employment with the Company or any subsidiary thereof.
17. WITHHOLDING OF TAXES. The Company shall have the right to (a) make
deductions from the number of Shares otherwise deliverable upon exercise of the
Option in an amount sufficient to satisfy withholding of any federal, state or
local taxes required by law, or (b) take such other action as may be necessary
or appropriate to satisfy any such tax withholding obligations.
18. GENERAL.
(a) NOTICES. All notices under this Agreement shall be mailed or
delivered by hand to the parties at their respective addresses set forth
beneath their signatures below or at such other address as may be
designated in writing by either of the parties to one another. Notices
shall be effective upon receipt.
(b) SHARES RESERVED. Company shall at all times during the Option
Period reserve and keep available under the Plan such number of Shares as
shall be sufficient to satisfy the requirements of this Option.
(c) NONTRANSFERABILITY OF OPTION. The Option granted pursuant to
this Agreement is not transferable other than by will, the laws of descent
and distribution or by a qualified domestic relations order (as defined in
Section 414(p) of the Internal Revenue Code). The Option will be
exercisable during Optionee's lifetime only by Optionee or by Optionee's
legal representative in the event of Optionee's Disability. No right or
benefit hereunder shall in any manner be liable for or subject to any
debts, contracts, liabilities, obligations or torts of Optionee.
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(d) AMENDMENT AND TERMINATION. No amendment, modification or
termination of the Option or this Agreement shall be made at any time
without the written consent of Optionee and Company.
(e) NO GUARANTEE OF TAX CONSEQUENCES. The Company and the Committee
make no commitment or guarantee that any federal or state tax treatment
will apply or be available to any person eligible for benefits under the
Option. The Optionee has been advised and been provided the opportunity to
obtain independent legal and tax advice regarding the grant and exercise
of the Option and the disposition of any Shares acquired thereby.
(f) SEVERABILITY. In the event that any provision of this Agreement
shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Agreement, and the Agreement shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had not
been included herein.
(g) SUPERSEDES PRIOR AGREEMENTS. This Agreement shall supersede and
replace all prior agreements and understandings, oral or written, between
the Company and the Optionee regarding the grant of the Options covered
hereby.
(h) GOVERNING LAW. The Option shall be construed in accordance with
the laws of the State of Texas without regard to its conflict of law
provisions, to the extent federal law does not supersede and preempt Texas
law.
19. DEFINITIONS AND OTHER TERMS. The following capitalized terms shall
have those meanings set forth opposite them:
(a) OPTIONEE: __________
(b) GRANT DATE: ______________
(c) SHARES: ____________________ (______) of the Company's Common
Stock.
(d) OPTION PRICE: _____________________ Dollars ($_____) per
Share.
(e) OPTION PERIOD: _______________ 199__ through ____________ 200_
(until 12:00 p.m. CST).
(f) VESTING SCHEDULE: [Example] Options for ________ of the Shares
shall vest on the first anniversary of the Grant Date, and Options for an
additional _________ of the Shares shall vest on each subsequent
anniversary of the Grant Date until fully vested, as follows:
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DATE OPTIONS VESTING
---- ---------------
__________, 1998 ________
__________, 1999 ________
__________, 2000 ________
Total ========
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Company has, as of ______________ 1998, caused
this Agreement to be executed on its behalf by its duly authorized officer, and
Optionee has hereunto executed this Agreement as of the same date.
INDUSTRIAL HOLDINGS, INC.
By:________________________________
___________________________________
Industrial Holdings, Inc.
0000 Xxxxxxx
Xxxxxxx, XX 00000
Attention: _______________________
OPTIONEE
____________________________________
Signature
Address for Notices:
____________________________________
____________________________________
____________________________________
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