EXHIBIT 99.02
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STOCK OPTION AGREEMENT--
APPENDIX OF TERMS AND CONDITIONS
Your Option is subject to all the terms and provisions of the Plan, as
tailored by your Option Agreement and this Appendix of Terms and Conditions.
Capitalized terms not defined in your Option Agreement and this Appendix have
the meanings provided in the Plan.
A. TERMINATION OF EMPLOYMENT. Upon your termination of
employment or other service relationship with the Company, the unvested portion
of your Option expires. You may continue to exercise the vested portion of your
Option for a period of three months following your termination, unless the
termination was for Cause, or attributable to your death or Total Disability, as
described below. If your employment or other service relationship terminates for
Cause (as defined in the Plan), the unexercised portion of your Option expires
immediately, both unvested and vested portions.
If your employment or other service relationship with the Company
terminates because of your Total Disability, you may continue to exercise the
vested portion of your Option for 12 months (instead of the regular three
months) following the termination, but in no event beyond the original
Expiration Date. Similarly, if you die while still working for the Company, your
heirs or estate may exercise the vested portion of your Option for a period of
12 months following your death. Upon your death within three months following a
termination of employment or other service relationship (or within 12 months, if
termination is due to Total Disability), your estate or heirs will have 12
months following the date of your death to exercise the vested portion of your
Option.
B. OPTION EXERCISE. You may exercise your Option by
giving written notice to the Company, using the attached sample form or other
documentation substantially similar and satisfactory to the Company. Your
written exercise notice must be accompanied by full payment of the exercise
price for the number of shares you are purchasing.
C. FORM OF PAYMENT. You may pay your Option exercise
price in cash, with a cashier's check, or a personal check, unless the Plan
Administrator determines at the time of exercise not to accept a personal check.
D. TAX CONSEQUENCES. Your Option is intended as a
Nonqualified Stock Option (NQSO). Upon exercise of your Option, and receipt of
shares of Common Stock, you will have taxable income for federal income tax
reporting purposes, in an amount equal to the Fair Market Value of the shares,
measured at the time of exercise, less the Exercise Price you paid. The income
constitutes compensation, taxed at ordinary income rates. Upon your ultimate
sale of the shares, the resulting gain or loss will constitute capital gain or
loss, taxed at short or long-term capital gain rates, depending on whether you
have held the shares for at least a year. The tax rules associated with options
can be complex. The Company is not providing tax advice, and the preceding is
provided only as background information. You should consider obtaining personal
tax consulting before exercising your Option or selling the resulting shares.
Further, the
tax laws generally described above are in effect as of your Option Grant Date
and are subject to change.
E. WITHHOLDING TAXES. To the extent the exercise of your
Option generates taxable income, the income may trigger withholding tax
obligations for the Company. The Company has the right to retain, without
notice, sufficient shares to satisfy these obligations, as well as withhold
other amounts the Company may owe you. Alternatively, the Company may refrain
from issuing shares to you until acceptable arrangements have been made to
enable the Company to satisfy its withholding obligation.
F. NONTRANSFERABILITY OF OPTION. During your lifetime
only you can exercise your Option. Your Option is not transferable, except by
will or by the applicable laws of descent and distribution. Following your
death, the Plan provides that your Option may be exercised by your heirs or the
personal representative of your estate.
G. EFFECT OF SALE, MERGER OR EXCHANGE. In connection
with the completion of a liquidation of the Company, a sale of substantially all
of the Company's property, or a merger or sale of the Company's stock, after
which voting control of the Company belongs to individuals or entities who were
not shareholders of the Company prior to the transaction (collectively referred
to as a "Sales Event"), your Option will expire and terminate, provided the
Company will afford you advance notice and an opportunity prior to the Sales
Event to exercise your Option and your Option will accelerate and become 100%
vested in connection with the Sales Event.
In the alternative, the Company may (i) determine to cash out your
Option by paying you an amount equal to the Fair Market Value of a share of
Common Stock (as determined for purposes of the Sales Event), multiplied by the
number of shares of Common Stock available under your Option, and reduced by the
aggregate Exercise Price associated with your Option; (ii) continue your Option,
subject to the same terms and conditions (including the vesting schedule, if
any), that applied prior to the Sales Event, modified as deemed appropriate by
the Administrator in conjunction with the Sales Event; or (iii) if the Sales
Event involves a merger in which the shareholders of the Company exchange their
shares of Common Stock for shares of the surviving corporation, then at the
discretion of the Administrator and the surviving corporation, the Company may
convert your Option to an option to purchase shares of stock in the surviving
corporation (referred to as "Exchange Stock"). Your option for Exchange Stock
will possess terms and restrictions substantially identical to your Option,
adjusted as deemed appropriate by the Administrator. Unless determined otherwise
by the Administrator, your Option vesting will not accelerate in connection with
a Sales Event.
H. REGISTRATION / STOCK LEGEND. As described in Section
11 of the Plan, various federal and state securities laws must be satisfied
before the Company can issue shares to you upon the exercise of your Option. By
signing below, you acknowledge that you have read Section 11 and understand this
condition. Also, the certificates you receive for shares upon exercise of your
Option may possess the following legend or its equivalent:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
(the "Act"), and may not be sold, assigned, offered or
otherwise transferred unless (a) there is an effective
registration statement under the Act, or (b) the Company
receives an opinion of legal counsel for the holder of these
securities (concurred in by legal counsel for the Company)
stating that the transaction is exempt from registration or
the Company otherwise satisfies itself that the transaction is
exempt from registration.
I. EFFECT ON EMPLOYMENT / POST-EMPLOYMENT OBLIGATIONS.
By signing below and acknowledging receipt of your Option Agreement, you
acknowledge that the Plan is discretionary in nature, and the Company may
suspend or terminate it at any time, and that your Option does not entitle you
to additional option grants or continued employment or service with the Company,
or limit the Company's ability (or your ability) to terminate employment or
services at any time. You also acknowledge that the future value of the
underlying shares is unknown and cannot be predicted with certainty, and if the
underlying shares do not increase in value, then your Option may have no value.
J. GOVERNING LAW; ATTORNEYS FEES. The Plan, this Option
Agreement and this Appendix are governed by the laws of the State of Oregon. If
any provision of these documents is held to be invalid by a court having
jurisdiction, the remaining terms will remain in full force and effect. In the
event of any arbitration or litigation concerning your Option, each party will
pay its own court costs and attorney fees, and the prevailing party shall not be
entitled to recover those costs and fees from the non-prevailing party.
K. BINDING EFFECT. The terms and conditions expressed in
this Option Agreement and corresponding Appendix will inure to the benefit of
the successors and assigns of the Company and will be binding upon you and your
heirs, executors, administrators, successors and assigns.
ACCEPTANCE AND ACKNOWLEDGEMENT
I, as resident of the State of ____________________, accept the
Nonqualified Stock Option described in the Option Agreement dated
________________, the corresponding Appendix of Terms and Conditions and the
Xxxxxxxx Controls, Inc. 1993 Restated Stock Option Plan (all of which are
collectively referred to as the "Option Documents"). I also acknowledge receipt
of a copy of the Option Documents. I have reviewed the Option Documents and am
aware of their terms, particularly section H. of the Appendix entitled,
"Registration / Stock Legend."
Dated: ________________________ _____________________________
Signature of Optionee
By his or her signature below, the spouse of the Optionee, if such
Optionee is legally married as of the date of this Agreement, acknowledges that
having read this Agreement and the Plan, and being familiar with the terms and
provisions thereof, agrees to be bound by all the terms and conditions of this
Agreement and the Plan.
Dated: ________________________ _____________________________
Spouse's Signature
_____________________________
Printed Name
By his or her signature below, the Optionee represents that he or she
is not legally married as of the date of this Agreement.
Dated: _________________________ _____________________________
Signature of Optionee
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
To: Xxxxxxxx Controls, Inc.
I, a resident of the State of _______________________, hereby exercise
my Nonqualified Stock Option granted pursuant to the Option Agreement, dated
_________________. Specifically, I am notifying the Company of my desire to
purchase _________ shares of Common Stock (or a successor class of stock) of the
Company at the exercise price of $__________ per share.
I hereby represent and agree that the exercise of my Option, and the
shares I receive, are subject to the provisions the Option Agreement, the
corresponding Appendix of Terms and Conditions and the Xxxxxxxx Controls, Inc.
1993 Restated Stock Option Plan (all of which are collectively referred to as
the "Option Documents").
Dated: _____________________
____________________________ ________________________________
Taxpayer I.D. Number Signature of Optionee
Address:
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