Exhibit 99.2
1997 Stock Incentive Plan Form of Stock Option Agreement and Notice of Grant
BIOMAGNETIC TECHNOLOGIES, INC.
1997 STOCK OPTION PLAN:
STOCK OPTION AGREEMENT & NOTICE OF GRANT
THIS AGREEMENT, made and entered into as of the_____________and between
BIOMAGNETIC TECHNOLOGIES, INC., a California corporation, and
____________________, (the "Optionee").
W I T N E S S E T H:
1. DEFINITIONS.
(a) "AGREEMENT" shall mean this stock option agreement.
(b) "BOARD" shall mean the Board of Directors of the Corporation, as
constituted from time to time.
(c) "CAUSE" shall mean fraud, dishonesty, willful and habitual neglect
of or repeated failure to perform properly, the duties assigned to an
Optionee or conduct that is contrary to the best interests of the
Corporation. Cause shall be determined by the Committee in good faith.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean the Compensation committee of the Board in
accordance with Section 4 of the Plan.
(f) "CORPORATION" shall mean Biomagnetic Technologies, Inc., a
California corporation.
(g) "DATE OF GRANT" shall mean the date of this Agreement.
(h) "EMPLOYEE" shall mean (i) an individual who is an employee (within
the meaning of section 3401(c) of the Code and the regulations thereunder) of
the Corporation or of a Parent or Subsidiary or (ii) a director or adviser of
the Corporation or of a Parent or Subsidiary. Service as such a director or
adviser shall be deemed to be employment and service for all purposes of the
Plan except Section 5(b) thereof.
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of this Option, as specified in Paragraph 2 of this
Agreement.
(j) "INCENTIVE STOCK OPTION" shall mean an option described in section
422(b) of the Code.
(k) "NONQUALIFIED STOCK OPTION" shall mean an option not described in
sections 422(b) or 423(b) of the Code.
(l) "OPTION" shall mean either an Incentive Stock Option or a
Nonqualified Stock Option granted pursuant to the Plan and entitling the
holder to purchase Shares.
(m) "OPTION PERIOD" shall mean the term of this Option, as specified in
Paragraph 4 of this Agreement.
(n) "PARENT" shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, if each of the
corporations other than the Corporation owns stock possessing at least fifty
percent (50%) of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(o) "PARTIAL EXERCISE" shall mean an exercise with respect to less than
all of the remaining Shares subject to this Option.
(p) "PLAN" shall mean the Biomagnetic Technologies, Inc. 1997 Stock
Option Plan, as it may be amended.
(q) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the
number of Shares with respect to which this Option is exercised.
(r) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(s) "SHARE" shall mean one (1) share of Stock, as adjusted in
accordance with Section 10 of the Plan (if applicable).
(t) "SHAREHOLDERS" shall mean collectively the holders of the Common
Stock of the Corporation.
(u) "STOCK" shall mean the Common Stock of the Corporation.
(v) "SUBSIDIARY" shall mean any corporation, if the Corporation and/or
one or more other Subsidiaries own at least fifty percent (50%) of the total
combined voting power of all classes of outstanding stock or other evidence
of ownership in such corporation.
(w) "TOTAL AND PERMANENT DISABILITY" shall mean that the Optionee 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.
2. GRANT OF OPTION.
On the terms and conditions stated below, the Corporation hereby grants
to the Optionee the option to purchase ________________ for the sum of
_________ per Share, which is agreed to be ONE HUNDRED PERCENT (100%) of the
fair market value thereof on the Date of Grant.
This Option is granted pursuant to the Plan, a copy of which the
Optionee acknowledges having received and read.
3. RIGHT TO EXERCISE.
Subject to the conditions set forth below and the exceptions set forth
in Paragraphs 4(a) and 5 of this Agreement, this Option shall become
exercisable in cumulative installment as shown on Attachment "A" attached
hereto.
4. TERM OF OPTION.
This Option shall in any event expire TEN (10) YEARS after the Date of
Xxxxx. In addition, this Option shall expire upon termination of the
Optionee's service as Employee, if such termination occurs first, subject to
the following provisions:
a) If the termination of service as an Employee is caused by the Optionee's
death, then this Option may be exercised in full, whether or not the Option
is then exercisable pursuant to its terms, to the extent that it had not
previously been exercised, within twelve (12) months after the Optionee's
death by the Optionee's executors or administrators or by any person or
persons who have acquired this Option directly from the Optionee by bequest
or inheritance.
(b) If an Optionee ceases to be an Employee by reason of his or her
termination or removal for Cause, then the Optionee shall have the right to
exercise an Option (to the extent not previously exercised and not expired
and to the extent that the Option was exercisable under Paragraph 3 of this
Agreement on the date of termination) at any time within thirty (30) days
following the date of termination or removal; provided, however, that such
thirty day period shall be shortened to ten days if the Corporation sends a
notice of its intention to purchase shares upon exercise to the Optionee
following such termination or removal, in which event the Optionee shall have
ten days from the date of such notice to exercise an Option (to the extent
not previously exercised and not expired and to the extent that, on
termination, the Option has accrued (vested) pursuant to the terms of this
Agreement). In the event that Optionee exercises an Option within the ten
day period described in the preceding sentence, all Shares acquired upon such
exercise shall be deemed to be immediately offered to the Corporation for
cash purchase by the Corporation or its designee at Fair Market Value, and
any purchase by the Corporation or its designee must be consummated within
ten days after Optionee's exercise.
(c) If the termination of service as an Employee is caused by any
reason other than for Cause or by death, then this Option (to the extent not
previously exercised) may be exercised within a period of three (3) months
after the termination (twelve (12) months after the termination if the
termination is caused by Total and Permanent Disability), but only to the
extent that this Option was exercisable under Paragraph 3 of this Agreement
on the date of the termination. If the Optionee dies within such period,
this Option (to the extent not previously exercised) may be exercised within
twelve (12) months after the Optionee's death by the Optionee's executors or
administrators or by any person or persons who have acquired this Option
directly from the Optionee by bequest or inheritance, but only to the extent
that this Option was exercisable under Paragraph 3 of this Agreement on the
date of the termination.
Notwithstanding any other provision of this Agreement to the contrary,
this Option shall not be exercisable after the expiration date set forth in
the first sentence of this Paragraph 4.
For purposes of this Paragraph 4, service as an Employee shall be deemed to
continue while the Optionee is on military leave, sick leave or other bona fide
leave of absence (to be determined in the sole discretion of the Committee).
Notwithstanding the foregoing sentence, if this Option is designated as an
Incentive Stock Option in Paragraph 16 of this Agreement, service as an Employee
shall not be deemed to continue beyond the ninetieth (90th) day after the
Optionee ceased active employment as a common-law employee, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
5. SHARES AND ADJUSTMENTS.
The Corporation agrees that it will at all times during the Option
Period reserve and keep available sufficient authorized but unissued Stock to
satisfy the requirements of this Agreement.
Subject to any required action by the Shareholders, the number of Shares
subject to this Option and the Exercise Price shall be adjusted
proportionately for any increase or decrease in the number of issued Shares
resulting from a subdivision or consolidation of Shares or the payment of a
stock dividend or any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Corporation.
In the event of any of the following transactions (a "Corporate
Transaction"):
_ a merger or acquisition in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state of the Company's incorporation,
_ the sale, transfer or other disposition of all or substantially all of
the assets of the Company,
_ any reverse merger in which the Company is the surviving entity but in
which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred to holders different from those who held the
stock immediately prior to such merger,
then the exercisability of each option outstanding under the Option Plan
shall be automatically accelerated so that each such option shall,
immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the total number of
shares of Common Stock purchasable under such option and may be exercised
for all or any portion of such shares. However, an outstanding option
under the Option Plan shall not be so accelerated if and to the extent the
acceleration of such option is subject to other applicable limitations
imposed by the Committee at the time of grant.
Upon the consummation of the Corporate Transaction, all outstanding
options under the Option Plan shall, to the extent not previously exercised
or assumed by the successor corporation or its parent company, terminate and
cease to be outstanding.
The grant of options under the Option Plan shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
To the extent that the foregoing adjustments relate to securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons.
6. EXERCISE OF OPTION.
The Optionee or the Optionee's representative may exercise this Option
by giving written notice to the Secretary of the Corporation by delivery to
the Corporation of an exercise letter in the form attached as Exhibit "B".
The letter shall specify the election to exercise the Option, and the number
of Shares for which it is being exercised. The letter shall be signed by the
person or persons exercising this Option. In the event that this Option is
being exercised by the representative of the Optionee, the letter shall be
accompanied by proof satisfactory to the Corporation of the representative's
right to exercise this Option. The Optionee or the Optionee's representative
shall deliver to the Secretary of the Corporation at the time of giving the
letter payment in a form which conforms to Paragraph 16 of this Agreement for
the full amount of the Purchase Price.
The Corporation shall thereafter cause to be issued a certificate or
certificates for the Shares as to which this Option has been exercised,
registered in the name of the person exercising the Option (or (i) in the
names of such person and his or her spouse as community property or as joint
tenants with right of survivorship, or (ii) to a revocable inter vivos trust
of which the Optionee and the Optionee's spouse are both the sole trustees
and beneficiaries with right of survivorship). The Corporation shall cause
such certificate or certificates to be delivered to or upon the order of the
person exercising this Option.
7. WITHHOLDING TAXES.
In the event that the Corporation determines that it is required to
withhold federal, state or local tax as a result of the exercise of this
Option, the Optionee, as a condition to the exercise of this Option, shall
make arrangements satisfactory to the Corporation to enable it to satisfy
such withholding requirements.
8. RIGHTS AS A SHAREHOLDER.
Neither the Optionee nor the Optionee's representative shall have any
rights as a Shareholder with respect to any Shares subject to this Option
until such Shares have been issued in the name of the Optionee or the
Optionee's representative.
9. RESTRICTIVE LEGEND.
Stock certificates evidencing Shares acquired under this Agreement
in an unregistered transaction shall bear the following restrictive legend
(and such other restrictive legends as are required or deemed advisable under
the provisions of any applicable law):
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE
ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR
THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER
TO COMPLY WITH THE ACT."
10. REGISTRATION OF SECURITIES.
The Corporation may, but shall not be obligated to, register or qualify
the sale of Shares under the Securities Act or any other applicable law. The
Corporation shall not be obligated to take any affirmative action in order to
cause the sale of Shares under this Agreement to comply with any law.
11. REMOVAL OF LEGENDS.
If, in the opinion of the Corporation and its counsel, any legend
placed on a stock certificate representing Shares sold under this Agreement
is no longer required, the holder of such a certificate shall be entitled to
exchange such certificate for a certificate representing the same number of
Shares but lacking such legend.
12. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this Option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this Option, or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon any attempted sale under
any execution, attachment or similar process upon the rights and privileges
conferred hereby, this Option and the rights and privileges conferred hereby
shall immediately become null and void.
13. NO EMPLOYMENT RIGHTS.
Nothing in this Agreement shall be construed as giving the Optionee the
right to be retained as an Employee or as impairing the right of the
Corporation to terminate his or her service at any time, with or without
cause.
14. DESIGNATION OF OPTION.
The Committee hereby designates this Option as (check one only):
(a) X An Incentive Stock Option (common-law employees only)
(b) A Nonqualified Stock Option
15. PAYMENT FOR STOCK.
The entire Purchase Price shall be paid in cash (in U.S. dollars by
certified check, cashier's check or personal check), or shares of the
Company's Stock owned by the Optionee duly endorsed for transfer to the
Company with a Fair Market Value on the date of delivery equal to the
aggregate purchase price of the shares with respect to which such Option or
portion is exercised, or any other legal consideration (or combination
thereof) acceptable to the Committee at the time of exercise, in its sole and
absolute discretion, subject to any conditions the Committee may impose in
the case of payment other than cash.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by its officer duly authorized to act on behalf of the
Committee, and the Optionee has personally executed this Agreement.
________________________ BIOMAGNETIC TECHNOLOGIES, INC.
Optionee
By:________________________________
X.X. Xxxxxxxx
President & C.E.O
EXHIBIT B
EXERCISE LETTER
INCENTIVE STOCK OPTION
_____________________________
(Name)
_____________________________
_____________________________
(Address)
_____________________________
(Date)
BIOMAGNETIC TECHNOLOGIES, INC.
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Corporate Secretary
Gentlemen:
I hereby exercise my right to purchase _______ shares of Common Stock of
BIOMAGNETIC TECHNOLOGIES, INC., a California corporation ("Corporation"),
pursuant to, and in accordance with, that Stock Option Agreement
("Agreement") dated January 1, 1997. I am also delivering with this notice
the consideration called for in the Agreement in the amount of the aggregate
exercise price. Please deliver to me at my address as set forth above stock
certificates representing the subject shares registered in my name (and
_________________________________________, as ___________________________).
(spouse) (style of vesting)
In making this purchase, I represent to you and agree that:
1. NATURE OF RISK. I understand the nature of the investment, and I
am able to bear the economic risk thereof. I now have and have had access to
such information as to the Company's financial condition, operations,
products, marketing, sales and management as I have deemed appropriate in
evaluating the merits and risks of my prospective investment. Page Two
Page Two
Name:______________________________
Date:______________________________
2. TAX MATTERS. I represent and acknowledge my understanding that the
stock acquired upon exercise of the option must be held for at least one year
after the date of exercise and two years after the date of grant of the option
in order for the option to be treated as an Incentive Stock Option under Section
422A of the Internal Revenue Code of 1986, as amended. I understand that my tax
treatment may be adversely affected if I sell the stock acquired upon exercise
within two years after the option is granted or one year after the date of
exercise. I also understand that my exercise may subject me to the alternative
minimum tax. I have consulted with my own tax advisor with respect to these
matters and the tax consequences generally of this exercise.
Very truly yours,
_____________________________________
EXHIBIT B
EXERCISE LETTER
NONQUALIFIED STOCK OPTION
_____________________________
(Name)
_____________________________
_____________________________
(Address)
_____________________________
(Date)
BIOMAGNETIC TECHNOLOGIES, INC.
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Corporate Secretary
Gentlemen:
I hereby exercise my right to purchase _______ shares of Common Stock of
BIOMAGNETIC TECHNOLOGIES, INC., a California corporation ("Corporation"),
pursuant to, and in accordance with, that Non-Qualified Stock Option Agreement
("Agreement") dated January 1, 1997. As provided in that Agreement, I deliver
herewith a personal, certified or bank cashier's check in the amount of the
aggregate option price. Please deliver to me at my address as set forth above
stock certificates representing the subject shares registered in my name
(and______________________, as____________________).
(spouse) (style of vesting)
In making this purchase, I represent to you and agree that:
I understand the nature of the investment, and I am able to bear the
economic risk thereof. I now have and have had access to such information as to
the Company's financial condition, operations, products, marketing, sales and
management as I have deemed appropriate in evaluating the merits and risks of my
prospective investment.
Very truly yours,
_________________________________
