NONQUALIFIED STOCK OPTION AGREEMENT WINLAND ELECTRONICS, INC.
Exhibit
10.3
XXXXXXX
ELECTRONICS, INC.
2008
EQUITY INCENTIVE PLAN
THIS AGREEMENT, made effective as of
this ______ day of ___________, 20__, by and between Xxxxxxx Electronics, Inc.,
a Minnesota corporation (the “Company”), and _________________
(“Participant”).
W I T N E
S S E T H:
WHEREAS, Participant on the date hereof
is a key employee, officer, director of or consultant or advisor to the Company
or one of its Subsidiaries; and
WHEREAS, the Company wishes to grant a
nonqualified stock option to Participant to purchase shares of the Company’s
Common Stock pursuant to the Company’s 2008 Equity Incentive Plan (the “Plan”);
and
WHEREAS, the Administrator has
authorized the grant of a nonqualified stock option to Participant and has
determined that, as of the effective date of this Agreement, the fair market
value of the Company’s Common Stock is $ per
share;
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants herein contained, the parties hereto agree
as follows:
1. Grant of
Option. The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of ___________________________
(__________) shares of Common Stock at a per share price of $___________ on the
terms and conditions set forth herein, and subject to adjustment pursuant to
Section 15 of the Plan. This Option is a nonqualified stock option
and will not be treated as an incentive stock option, as defined under Section
422, or any successor provision, of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations thereunder.
2. Duration
and Exercisability.
a. General. The
term during which this Option may be exercised shall terminate on
_______________, ______, except as otherwise
provided in Paragraphs 2(b) through 2(d) below. This Option shall
become exercisable according to the following schedule:
Vesting
Date
|
Number of
Shares
|
|
Once the
Option becomes fully exercisable, Participant may continue to exercise this
Option under the terms and conditions of this Agreement until the termination of
the Option as provided herein. If Participant does not purchase upon
an exercise of this Option the full number of shares which Participant is then
entitled to purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination such previously unpurchased shares in
addition to those Participant is otherwise entitled to purchase.
b. Termination
of Relationship (other than Disability or Death). If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
for any reason other than disability or death, this Option shall completely
terminate on the earlier of (i) the close of business on the three-month
anniversary of the date of termination of Participant’s relationship, and
(ii) the expiration date of this Option stated in Paragraph 2(a)
above. In such period following such termination of Participant’s
relationship, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding the date on which
Participant’s relationship with the Company or Subsidiary has terminated, but
had not previously been exercised. To the extent this Option was not
exercisable upon the termination of such relationship, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all
rights of Participant under this Option shall be forfeited.
c. Disability. If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
because of disability (as defined in Code Section 22(e), or any successor
provision), this Option shall completely terminate on the earlier of (i) the
close of business on the twelve-month anniversary of the date of termination of
Participant’s relationship, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above. In such period following such
termination of Participant’s relationship, this Option shall be exercisable only
to the extent the Option was exercisable on the vesting date immediately
preceding the date on which Participant’s relationship with the Company or
Subsidiary has terminated, but had not previously been exercised. To
the extent this Option was not exercisable upon the termination of such
relationship, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(c), all rights of Participant under this Option
shall be forfeited.
d. Death. In
the event of Participant’s death, this Option shall terminate on the earlier of
(i) the close of business on the twelve-month anniversary of the date of
Participant’s death, and (ii) the expiration date of this Option stated in
Paragraph 2(a) above. In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on the
vesting date immediately preceding the date of Participant’s death, but had not
previously been exercised. To the extent this Option was not
exercisable upon the date of Participant’s death, or if such person or persons
fail to exercise this Option within the time specified in this Paragraph 2(d),
all rights under this Option shall be forfeited.
3. Manner of
Exercise.
a. General. The
Option may be exercised only by Participant (or other proper party in the event
of death or incapacity), subject to the conditions of the Plan and subject to
such other administrative rules as the Administrator may deem advisable, by
delivering within the option period written notice of exercise to the Company at
its principal office. The notice shall state the number of shares as
to which the Option is being exercised and shall be accompanied by payment in
full of the option price for all shares designated in the notice. The
exercise of the Option shall be deemed effective upon receipt of such notice by
the Company and upon payment that complies with the terms of the Plan and this
Agreement. The Option may be exercised with respect to any number or
all of the shares as to which it can then be so exercised and, if partially
exercised, may be so exercised as to the unexercised shares any number of times
during the option period as provided herein.
b. Form of
Payment. Payment of the option price by Participant shall be
in the form of cash, personal check, certified check or, if not prohibited by
the Administrator, previously acquired shares of Common Stock of the Company, or
any combination thereof. Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the
Plan. For purposes of this Agreement, “previously acquired shares of
Common Stock” shall include shares of Common Stock that are already owned by
Participant at the time of exercise.
c. Stock
Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. All requisite original issue
or transfer documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Rights as
Shareholder. This Agreement shall not confer on Participant
any right with respect to the continuance of any relationship with the Company
or any of its Subsidiaries, nor will it interfere in any way with the right of
the Company to terminate any such relationship. Participant shall
have no rights as a shareholder with respect to shares subject to this Option
until such shares have been issued to Participant upon exercise of this
Option. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 13 of the Plan.
b. Securities
Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other
laws. Participant may be required by the Company, as a condition of
the effectiveness of any exercise of this Option, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held, until such
time that such Common Stock is registered and freely tradable under applicable
state and federal securities laws, for Participant’s own account without a view
to any further distribution thereof, that the certificates for such shares shall
bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.
c. Mergers,
Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 15 of the Plan, certain changes in the number or character of the Common
Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant
shall have such “anti-dilution” rights under the Option with respect to such
events, but shall not have “preemptive” rights).
d. Shares
Reserved. The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
e. Withholding Taxes. In
order to permit the Company to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to insure that, if necessary, all applicable federal or state
payroll, income or other taxes are withheld from any amounts payable by the
Company to Participant. If the Company is unable to withhold such
federal and state taxes, for whatever reason, Participant hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law.
Subject to such rules as the
Administrator may adopt, the Administrator may, in its sole discretion, permit
Participant to satisfy such withholding tax obligations, in whole or in part (i)
by delivering shares of Common Stock of having an equivalent fair market value,
or (ii) by electing to have the Company withhold shares of Common Stock
otherwise issuable to Participant having a fair market value equal to the
minimum amount required to be withheld for tax
purposes. Participant’s election to have shares withheld for purposes
of such withholding tax obligations shall be made on or before the date that
triggers such obligations or, if later, the date that the amount of tax to be
withheld is determined under applicable tax law. Participant’s
election shall be approved by the Administrator and otherwise comply with such
rules as the Administrator may adopt to assure compliance with Rule 16b-3 or any
successor provision, as then in effect, of the General Rules and Regulations
under the Securities and Exchange Act of 1934, if applicable.
f. Nontransferability. During
the lifetime of Participant, the accrued Option shall be exercisable only by
Participant or by the Participant’s guardian or other legal representative, and
shall not be assignable or transferable by Participant, in whole or in part,
other than by will or by the laws of descent and distribution.
g. 2008
Equity Incentive Plan. The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This
Agreement is subject to and in all respects limited and conditioned as provided
in the Plan. All defined terms of the Plan shall have the same meaning when used
in this Agreement. The Plan governs this Option and, in the event of
any questions as to the construction of this Agreement or in the event of a
conflict between the Plan and this Agreement, the Plan shall govern, except as
the Plan otherwise provides.
h. Lockup
Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of its
Common Stock in compliance with the Securities Act of 1933, as amended, and that
the underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the
prospectus, Participant will not sell or contract to sell or grant an option to
buy or otherwise dispose of this option or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or its
representative(s).
i. Blue Sky
Limitation. Notwithstanding anything in this Agreement to the
contrary, in the event the Company makes any public offering of its securities
and determines in its sole discretion that it is necessary to reduce the number
of issued but unexercised stock purchase rights so as to comply with any state
securities or Blue Sky law limitations with respect thereto, the Board of
Directors of the Company shall have the right (i) to accelerate the
exercisability of this Option and the date on which this Option must be
exercised, provided that the Company gives Participant 15 days’ prior written
notice of such acceleration, and (ii) to cancel any portion of this Option or
any other option granted to Participant pursuant to the Plan which is not
exercised prior to or contemporaneously with such public
offering. Notice shall be deemed given when delivered personally or
when deposited in the United States mail, first class postage prepaid and
addressed to Participant at the address of Participant on file with the
Company.
j. Stock
Legend. The Administrator may require that the certificates
for any shares of Common Stock purchased by Participant (or, in the case of
death, Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraphs 4(b), 4(h) and 4(i) of this Agreement.
k. Scope of
Agreement. This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and Participant and any successor
or successors of Participant permitted by Paragraph 2 or Paragraph 4(f)
above.
l. Arbitration. Any
dispute arising out of or relating to this Agreement or the alleged breach of
it, or the making of this Agreement, including claims of fraud in the
inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy. If,
notwithstanding, such dispute cannot be resolved, such dispute shall be settled
by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or
an attorney who has practiced securities or business litigation for at least 10
years. If the parties cannot agree on an arbitrator within 20 days,
any party may request that the chief judge of the District Court for Hennepin
County, Minnesota, select an arbitrator. Arbitration will be
conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement. Limited civil
discovery shall be permitted for the production of documents and taking of
depositions. Unresolved discovery disputes may be brought to the
attention of the arbitrator who may dispose of such dispute. The
arbitrator shall have the authority to award any remedy or relief that a court
of this state could order or grant; provided, however, that punitive or
exemplary damages shall not be awarded. The arbitrator may award to
the prevailing party, if any, as determined by the arbitrator, all of its costs
and fees, including the arbitrator’s fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys’
fees. Unless otherwise agreed by the parties, the place of any
arbitration proceedings shall be Hennepin County, Minnesota.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
the day and year first above written.
XXXXXXX ELECTRONICS, INC.
By:
Its:
PARTICIPANT