TECHNOLOGY RESEARCH CORPORATION NON-QUALIFIED STOCK OPTION AGREEMENT
TECHNOLOGY
RESEARCH CORPORATION
2000
LONG
TERM INCENTIVE PLAN
This
OPTION AGREEMENT is made this ____
day of _________, ____, between TECHNOLOGY RESEARCH CORPORATION, a Florida
corporation, hereinafter referred to as the "Corporation" and
__________________, a Director of the Corporation, hereinafter
referred to as "Director."
WHEREAS,
the holders of a majority of
the shares of the Corporation’s voting common stock (the "Common Stock")
represented in person or by proxy have adopted the terms and conditions of
the
2000 Long Term Incentive Plan (the "Plan"), at its Annual Meeting of
shareholders conducted on August 24, 2000 and modified on August 21, 2003,
the
terms of which are hereby incorporated by reference;
WHEREAS,
the Corporation desires to
carry out the purposes of the Plan to afford the Director an opportunity to
purchase shares of its Common Stock and participate in the continued success
and
growth of the Corporation and to enhance ownership of the Corporation’s common
stock by members of its Board of Directors.
NOW,
THEREFORE, in consideration of the
mutual covenants hereinafter set forth and for other good and valuable
consideration, the parties hereto agree as follows:
1. Grant
of
Option. The Corporation hereby
irrevocably grants to the Director a Non-qualified
StockOption, hereinafter called the "Option", to
purchase all or any part of an aggregate of ______
shares (such number being subject to adjustment as provided in
paragraph 10 hereof) of the Corporation’s Common Stock (the "Shares") on the
terms and conditions herein set forth. The Option granted under this
Agreement is intended to qualify as an incentive stock option, as that term
is
defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Purchase
Price. The purchase price of the Shares
covered by the Option shall be $______ per
share.
3. Term
of
Option. The term of the Option shall be
for a period of ten (10) years commencing on the date of grant of the Option;
provided that any option granted to a Director owning more than ten percent
(10%) of the voting power of all classes of voting stock of the Corporation
shall similarly expire five years after the date of grant of such
option.
4. Exercise
of
Option. The Option may be exercised in
whole or in part from time to time during its specified term in accordance
with
the following schedule:
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·
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________ shares
on ________, _____
and
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·
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________ shares
on ________, _____.
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Exercisability
of the Option Shares under this Section 4. is cumulative, and after the Option
becomes exercisable under this Agreement with respect to any portion of the
Option Shares, it shall continue to be exercisable with respect to that portion
of the Option Shares until the Option expires.
The
Director shall be entitled to
exercise any portion of the Option in accordance with the provisions of Section
4 hereof, either in whole or in part, by delivering written notice of such
exercise to the office of the Secretary of the Corporation or to such other
location as may be designated by the Board (as that term is defined in the
Plan), specifying therein the number of Shares with respect to which the Option
is being exercised, which notice shall be accompanied by payment in full of
the
purchase price of the Shares being acquired.
Notwithstanding
anything in this Section to the contrary, the Option Shares shall become fully
vested upon the occurrence of a "change in control," if the change in control
occurs prior to the Option Shares becoming fully vested, and the Director’s date
of termination of directorship as a Director of the Corporation. For
purposes of this Section, the term "change in control" means (a) the
acquisition of beneficial ownership, as that term is defined in Rule 13d-3
under
the Securities Exchange Act of 1934, as amended, by any entity, person, or
group, of more than 50% of the outstanding capital stock of the Corporation
entitled to vote for the election of directors (“Voting Stock”); (b) the
effective date of (i) a merger or consolidation of the Corporation with one
or
more other corporations as the result of which the holders of the outstanding
Voting Stock of the Corporation immediately prior to such merger or
consolidation (excluding those who are affiliates of any such other corporation)
hold less than 50% of the Voting Stock of the surviving or resulting
corporation, or (ii) a transfer of substantially all of the property of the
Corporation other than to an entity of which the Corporation owns at least
50%
of the Voting Stock; or (c) the election to the Board, without the
recommendation or approval of the incumbent board of the directors, constituting
a majority of the number of directors of the Corporation then in
office.
5. Payment
of Exercise Price. Payment
may be made (i) wholly or partly in cash, (ii) in Stock valued at its
Fair Market Value at the date of exercise, (iii) by agreeing to surrender
options then exercisable by the Director valued at the excess of the aggregate
Fair Market Value of the Stock subject to such options on the date of exercise
over the aggregate option exercise price of such Stock; (iv) by directing the
Corporation to withhold such number of Stock otherwise issuable upon exercise
of
such options having an aggregate Fair Market Value on the date of exercise
equal
to the exercise price of the option; or (v) by such other medium of payment
as
the Board, in its discretion, shall authorize, or by any combination of the
aforementioned methods of payment. No Shares shall be issued until
full payment therefore has been made in the manner set forth above or in any
combination of the methods set forth above, in each case to the extent approved
by the Board.
6. Termination
of Directorship. In the event that
termination of directorship occurs for any reason (other than by reason of
death
or permanent and total disability) and the Committee, as defined in the Plan,
determines the Director to be in good standing, then the Option shall be
considered fully and immediately vested, and the Director shall be entitled
to
exercise the Option at any time within three (3) months after such termination,
but in no event more than ten (10) years after the date of grant of the Option;
ii) the Director not to be in good standing, then the Director shall be entitled
to exercise the vested portion of the Option at any time within three (3) months
after such termination, but in no event more than ten (10) years after the
date
of grant of the Option
7. Death
of Director. If the directorship of the
Director terminates due to death, the Option shall expire on the first
anniversary of such termination of directorship or the date the Option expires
in accordance with its terms, whichever occurs first. The vested
Options may be exercised by the devisee or legatee of the Director or by the
personal representative or executor of his estate with respect to the same
number of shares of Common Stock in the same manner, and to the same extent
as
if the Director had continued his directorship during such period and the Option
shall be canceled with respect to all remaining shares of Common Stock otherwise
subject to the Option.
8. Permanent
and Total Disability of Director. A
permanent and totally disabled Director may exercise any Option within twelve
(12) months after leaving the Corporation’s Board of Directors, or the date that
the Option expires in accordance with its terms, whichever occurs
first. For purposes of the Plan and this Option, an individual is
deemed to be permanently and totally disabled if he is unable to engage in
any
substantial, gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
9. Transferability
of Option. Unless otherwise approved by
the Board of Directors, the Option may be exercised only by the Director during
his lifetime and may not be transferred other than by will or the applicable
laws of descent or distribution. The Option shall not otherwise be
transferred, assigned, pledged or hypothecated for any purpose whatsoever and
is
not subject, in whole or in part, to execution, attachment, or similar
process. Any attempt at assignment, transfer, pledge or hypothecation
or other disposition of the Option, other than in accordance with the terms
set
forth herein, shall be void and of no effect. Notwithstanding
anything in this Section to the contrary, the Director, with the approval of
the
Board, may transfer the Option for no consideration to or for the benefit of
the
Director’s immediate family (including, without limitation, to a trust for the
benefit of the Director’s immediate family or to a partnership or limited
liability company for one or more members of the Director’s immediate family),
subject to such limits as the Board may establish, and the transferee shall
remain subject to all the terms and conditions applicable to the Option prior
to
such transfer. The foregoing right to transfer the Option shall apply
to the right to consent to amendments to this Agreement and, in the discretion
of the Board, shall also apply to the right to transfer ancillary rights
associated with the Option. The term “immediate family” shall mean
the Director’s spouse, parent, children, stepchildren, adoptive relationships,
sisters, brothers and grandchildren (and, for this purpose, shall also include
the Director).
10. Adjustment
of Number of Shares. In the event that
a dividend shall be declared upon the Common Stock of the Corporation payable
in
shares of Common Stock of the Corporation or a stock split, the number of shares
of Common Stock then subject to any such option and the number of shares
reserved for issuance pursuant to the Plan but not yet covered by an Option
shall be adjusted by adding to each share the number of shares which shall
be
distributed thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend or
split. For example, if an Option were granted for 1,000 shares at a
$10.00 per share option price (a total price of $10,000), and subsequently
there
was a two for one stock split, then the holder of such option shall be entitled
to purchase 2,000 shares of Common Stock at the price of $5.00 per share or
an
aggregate purchase price of $10,000. In the event that the
outstanding shares of the Common Stock of the Corporation shall be changed
into
or exchanged for a different class of shares of stock of the Corporation or
of
another Corporation, whether through reorganization, recapitalization, merger
or
acquisition, then there shall be substituted for each share of Common Stock
subject to any such option and for each share of Common Stock reserved for
issuance pursuant to the Plan, but not yet covered by an Option, the number
and
kind of shares of stock or other securities into which each outstanding share
of
Common Stock shall be so changed or for which such share shall be
exchanged. No adjustment or substitution provided for in this
paragraph shall require the Corporation to sell a fractional share.
11. Stock
Certificates. Upon exercise of the
Option and payment of the exercise price, the Corporation shall deliver a
certificate or certificates representing such Shares as soon as practicable
after the notice shall be received; or (b) fix a date (not less than five (5)
nor more than ten (10) business days from the date such notice shall be received
by the Corporation) for the payment of the full purchase price of such Shares
with the Secretary of the Corporation, against delivery of a certificate or
certificates representing such shares. The certificate or
certificates for the Shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons so exercising the
Option (or, if the Option shall be exercised by the Director and if the Director
shall so request in the notice exercising the Option, shall be registered in
the
name of the Director and another person jointly, with right of survivorship)
and
shall be delivered upon the written order of the person or persons exercising
the Option. In the event the Option shall be exercised pursuant to
Section 7 hereof by any person or persons other than the Director, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise the Option. All shares that shall be purchased upon the
exercise of the Option as provided herein shall be fully paid and
non-assessable.
12. No
Additional Rights. Neither the Director
nor any other person entitled to exercise the Option under the terms hereof
shall be, or have any of the rights or privileges of, a shareholder of the
Corporation with respect to any of the Shares of Common Stock issuable upon
exercise of the Option, unless and until the purchase price for such Shares
shall have been paid in full.
13. Cancellation
or Modification of Agreement. In the
event that the Option shall be exercised in whole, this Agreement shall be
surrendered to the Corporation for cancellation. In the event the
Option shall be exercised in part, or a change in the number or designation
of
the Common Stock shall be made, this Agreement shall be delivered to the
Corporation for the purpose of making appropriate notation thereon or otherwise
revising in such manner as the Corporation shall determine the partial exercise
or change in the number of Shares or designation of the Shares of Common
Stock.
14. Reload
Stock Options. Subject to the terms and
conditions within the Plan, the Board may at its discretion grant a reload
stock
option to the Director to purchase that number of Shares delivered to the
Corporation in partial or full payment of the exercise price of an Option;
provided, however, (i) that any reload option is granted with an exercise price
that reflects the current fair market value of such Shares; (ii) any reload
stock option does not cause the Plan to lose its exemption under Rule 16b-3
of
the Exchange Act, as may be amended from time to time; and (iii) any grant
of a
reload option does not cause the Director to violate the provisions of Section
16(b) of the Exchange Act.
15. Notices. Every
direction, revocation or notice authorized or required by the Plan shall be
deemed delivered to the Corporation (i) on the date it is personally delivered
to the Secretary of the Corporation at its principal executive offices or (ii)
three business days after it is sent by registered or certified mail, postage
prepaid, addressed to the Secretary at such offices, and shall be deemed
delivered to an optionee (i) on the date it is personally delivered to him
or
(ii) three business days after it is sent by registered or certified mail,
postage prepaid, addressed to him at the last address shown for him on the
records of the Corporation.
16. Investment
Purpose. The Option is granted on the
express condition that the purchase of Shares upon an exercise hereof shall
be
made for investment purposes only and not with a view to their resale or further
distribution unless such Shares, at the time of their issuance and delivery,
are
registered under the Securities Act of 1933, as amended, or, alternatively,
at
some time following such issuance their resale is determined by counsel for
the
Corporation to be exempt from the registration requirements of the Act and
of
any other applicable law, regulation or ruling.
17. Tax
Withholding. The Corporation shall have
the right to deduct from any payment or settlement upon the exercise of any
stock option, or the delivery of any Shares, any federal, state, local or other
taxes of any kind which the Board, in its sole discretion, deems necessary
to be
withheld to comply with the Internal Revenue Code and/or any other applicable
law, rule or regulation. If the Board, in its sole discretion,
permits Shares of the Corporation’s Common Stock to be used to satisfy any such
tax withholding, such Shares shall be valued based on the fair market value
of
such Shares as of the date the tax withholding is required to be made, as
determined by the Board.
18. General. The
Corporation shall at all times during the term of the Option reserve and keep
available such number of shares of Common Stock as will be sufficient to satisfy
the requirements of this Option Agreement, shall pay all original issue and
transfer taxes with respect to the issue and transfer of shares pursuant hereto
and all other fees and expenses necessarily incurred by the Corporation in
connection therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto. The Option shall
be exercised in accordance with such administrative regulations as the Board
shall from time to time adopt.
19. Acceptance
by Director. The exercise of the Option
is conditioned upon the acceptance of Director of the terms hereof as evidenced
by his execution of this Option Agreement.
IN
WITNESS WHEREOF, the Corporation has
caused this Option Agreement to be duly executed by its officers thereunto
duly
authorized, and the Director has hereunto set his hand and seal, all on the
day
and year first above written.
TECHNOLOGY
RESEARCH
CORPORATION
By:
Name:
Its:
DIRECTOR
_
