Exhibit 10.34
NONSTATUTORY
STOCK OPTION AGREEMENT
This Nonstatutory Stock Option Agreement (the "Agreement"), made on the
28th day of July 2004, by and between M-WAVE, INC. (the "Company") and XXXXXX X.
("XXX") XXXXX (the "Optionee") evidences the grant, by the Company, of a
Nonstatutory Stock Option (the "Option") to the Optionee on the date hereof (the
"Date of Grant"), in accordance with Section 3.2.4 of the Employment Agreement
(the "Employment Agreement") of even date herewith between the Optionee and the
Company pursuant to which the Optionee shall serve as the Chief Executive
Officer of the Company. The Company and the Optionee agree as follows:
1. Shares Optioned and Option Price. The Optionee shall have an Option to
purchase 400,000 shares of the Company's common stock, par value $.005 per share
(the "Common Stock"), at a price of $1.16 for each share ("Exercise Price"),
being the closing price of the Common Stock on the NASDAQ SmallCap Market on the
Date of Grant. The Option shall be subject to all the terms and conditions of
the Agreement.
2. Option Status. The Option is intended to be a nonstatutory option and shall
not be deemed to meet the requirements of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code").
3. Vesting of Option. Subject to the conditions and limitations of this
Agreement, all shares for which the Option is granted shall become vested and
exercisable as of the close of business on October 28, 2004.
4. Exercise Period. Subject to the conditions and limitations of this Agreement
and except as may be otherwise set forth in the Employment Agreement,, the
Option may be exercised, from time to time, with respect to all or any number of
the then vested, unexercised shares of Common Stock remaining subject to the
Option during the period beginning on the Date of Grant and ending on the
earliest to occur of the following dates:
(a) the last day of the five-year period beginning on the Date of Grant;
(b) the 90th day after the date that the Optionee's service as an
employee of the Company terminates, unless (c) below applies to the
Optionee; or
(c) the date that the Optionee's service as an employee of the Company
terminates for Cause (as defined in the Employment Agreement).
The Option may not be exercised to the extent that it is not vested and, after
the date that the Optionee's service as an employee of the Company terminates,
may not be exercised to the extent that the Option is not vested on such date of
termination. For purposes of determining the period in which the Option may be
exercised under this paragraph 4, any period that the Optionee is a member of a
board of directors of the Company or is retained by the Company as a consultant
for regular and substantial services shall be considered service as an employee.
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5. Exercise of Option. During the period that the Option is exercisable, it may
be exercised in full or in part by (a) the Optionee, (b) in the event of the
Optionee's death, by the person or persons to whom the Option was transferred by
will or the laws of descent and distribution or (c) if the Option has been
transferred with the consent of the Company, by the permitted transferee hereof,
by delivering or mailing written notice of the exercise to the Company along
with full payment of the exercise price. Payment of the exercise price shall be
made in cash (including personal check) or, to the extent permitted by the
Company, in shares of Common Stock with an aggregate fair market value (as
reasonable determined by the Board of Directors of the Company) equal to the
exercise price on the date that the notice is received by the Company. The
written notice shall be signed by each person entitled to exercise the Option
and shall specify the address and social security number of each such person. If
any person other than the Optionee purports to be entitled to exercise all or
any portion of the Option, the written notice shall be accompanied by proof,
satisfactory to the Company, of that entitlement. The written notice will be
effective and the Option shall be deemed exercised to the extent specified in
the notice on the date that the written notice (together with required
accompaniments) is received by the Company.
6. Transfer of Shares on Exercise. As soon as practicable after receipt of an
effective written notice of exercise and full payment of the purchase price, the
Company shall cause ownership of the appropriate number of shares of Common
Stock to be transferred to the person or persons exercising the Option by having
a certificate or certificates for those shares registered in the name of such
person or persons and shall have each certificate delivered to the appropriate
person.
7. Tax Withholding. The Company shall require payment of any tax required by law
to be withheld by the Company with respect to exercise of the Option prior to
transfer of the shares. To the extent permitted by the Company, the amount
required to be withheld may be paid by surrender of shares of Common Stock or by
the Company's retention of shares of Common Stock otherwise deliverable on
exercise, valued in each case at their fair market value (as reasonably
determined by the Board of Directors of the Company) on the date of exercise.
8. Restrictions on Transfers of Rights. The rights of the Optionee under this
Agreement may not be transferred except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined in
the Code), and the rights under this Agreement may be exercised during the
lifetime of the Optionee only by the Optionee; provided, however, that the
Company may, in its discretion, permit the Optionee to transfer the Option: (a)
to family members; (b) to custodianships under the Uniform Transfers to Minors
Act or any similar statute; (c) to trusts for the benefit of the Optionee and
his family members; (d) to family partnerships; and (e) on termination or
dissolution of such custodianship, trust, or family partnership, to the person
or persons who, in accordance with the terms of such custodianship, trust, or
partnership, are entitled to receive the transferred Option.
9. No Shareholder Rights before Exercise. The Optionee shall not have any rights
of a shareholder of the Company with respect to any Common Stock subject to the
Option unless and until such shares are issued upon exercise of the Option.
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10. Entire Agreement. The Agreement represents the entire agreement between the
Company and the Optionee in connection with the Option.
11. Adjustment. The number of shares of Common Stock to which the Option relates
and the Exercise Price shall be subject to appropriate adjustment (as reasonably
determined by the Board of Directors of the Company) in the event of a stock
dividend, stock split, reverse stock split, share combination, recapitalization,
merger, consolidation, asset spin-off, reorganization or similar event, of or by
the Company.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have signed this Agreement as of the day and year first above written.
M-WAVE, INC.:
By: _________________________________________
Its: President
OPTIONEE:
_____________________________________________
Xxxxxx X. ("Xxx") Xxxxx
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