EXHIBIT 99.2
GAMMA PRECISION TECHNOLOGY, INC. FORM OF STOCK OPTION AGREEMENT
GAMMA PRECISION TECHNOLOGY, INC.
INCENTIVE STOCK OPTION AGREEMENT
GENERAL OPTION INFORMATION
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Name of Employee: _________________________________
Address of Employee: __________________________
__________________________
Total Number of Option Shares: _______________
Option Exercise Price: $_______ per share
Date of Grant: ______________, 199__.
Option Expiration Date: ______________, 19__ (the day after the date ___ years
from the Date of Grant).
Exercise Schedule:
Initially, none of the Option Shares shall be exercisable. ___% of the
total number of Option Shares shall become exercisable on the first
anniversary of _______________ 199__. An additional ___% of the total
number of Option Shares shall become exercisable on each monthly
anniversary thereafter until the Option is fully vested (so that all of the
Option Shares will become exercisable on ______________, ____).
TERMS OF AGREEMENT
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This Incentive Stock Option Agreement (the "Agreement") is made and entered
into, as of the Date of Grant indicated above, between Gamma Precision
Technology, Inc., a California corporation (the "Company"), and the Employee
indicated above, pursuant to the Company's Stock Option Plan (the "Plan"), which
reserves for issuance to persons serving the Company and its Subsidiaries as
employees and consultants certain shares of the Company's no par value Common
Stock (hereinafter called the "Common Stock"). As used in this Agreement, the
term "Subsidiary" shall mean any present or future corporation which would be a
"subsidiary corporation" of the Company, as that term is defined in Sections
425(f) and (g) of the Internal Revenue Code of 1986 (the "Code").
The Company desires to carry out the purposes of the Plan by affording the
Employee, who is an employee of the Company, an opportunity to purchase shares
of Common Stock by means of the grant of an incentive stock option, under the
terms and conditions of this
Agreement. Accordingly, the Company and the Employee agree as follows:
1. Grant of Option. The Company hereby grants to the Employee, subject
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to the terms and conditions of this Agreement, the right and option (hereinafter
called the "Option") to purchase all or any part of the Total Number of Option
Shares indicated in the General Option Information above (such number being
subject to adjustment as provided in Section 7 of this Agreement and referred to
in this Agreement as the "Option Shares"). The Option is intended to qualify as
an "incentive stock option" within the meaning of Section 422A of the Code.
2. Purchase Price. The purchase price of the Option Shares shall be the
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Option Exercise Price indicated in the General Option Information above, which
price has been determined by the Stock Option Committee (the "Committee")
appointed by the Board of Directors to be not less than the fair market value of
said shares as of the Date of Grant.
3. Terms of Option. The Option shall expire on the Option Expiration
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Date, and shall not be exercisable on or after that date, subject to earlier
termination as provided in Sections 5, 6, and 7 hereof, or when all of the
Option Shares have been acquired. Subject to the provisions of Section 8, the
Option shall become exercisable as indicated in the Exercise Schedule in the
General Option Information section above. Fractional shares shall be rounded to
the nearest whole share. The Option my be exercised as to any or all of the
available Option Shares; provided, however, that if the Option is exercised for
fewer than all of the available Option Shares, it can-not be exercised for less
than twenty percent (20%) of the Option Shares. The purchase price of the shares
as to which the Option shall be exercised shall be paid in full at time of
exercise as provided in Section 8. Except as provided in Sections 5 and 6
hereof, the Option may not be exercised at any time unless the Employee is then
in the service of the Company and shall have been continuously employed by the
Company or a subsidiary since the Date of Grant. The Employee shall not have any
of the rights of a shareholder with respect to the Option Shares as to which
there has been no exercise of the Option.
4. Nontransferability. The Option shall not be transferable otherwise
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than by will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of the Employee, only by the Employee. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5. Termination of Employment. Except as provided in Section 6, in the
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event that the Employee's employment with the Company and its Subsidiaries is
terminated for any reason, with or without cause, and whether at the initiative
of the Employee or the Company, the Option may be exercised by the Employee, to
the extent that the Employee shall have been entitled to do so at the date of
such termination, at any time within thirty (30) days after such termination,
but not on or after the Option Expiration Date, on which date the Option shall
terminate. Nothing in this Agreement shall confer upon the Employee any right
to continue in the employ of the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate the
Employee's employment at any time.
6. Death or Disability of Employee. If prior to the Option Expiration
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Date the Employee shall die or became disabled while employed by the Company or
one or more of its Subsidiaries or within thirty (30) days after the termination
of such employment, the Option may be exercised (to the extent that the Employee
shall have been entitled to do so at the date of the Employee's death or
disability) by the Employee (or by the Employee's personal representatives,
heirs or legatees) at any time within one (1) year after his death or
disability, but not on or after the Option Expiration Date, on which date the
Option shall terminate. For purposes of this Agreement, "disability" shall be
defined as those conditions described in Code Section 22(e)(3), and such other
conditions as the Committee may reasonably determine constitute a disability.
7. Adjustments Upon Changes in Capital Structure.
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1. Stock Splits and Like Events. If a stock dividend, stock split
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or reverse stock split, or reclassification were to occur, then the aggregate
number and/or class of shares subject to this Option and the exercise price
prior to such occurrence shall be appropriately adjusted by the Committee in
accordance with the terms of the Plan, and such adjustment shall be conclusive.
Such adjustment shall have the result that if the Employee were to exercise a
portion of the Option subsequent to such occurrence, then Employee shall pay the
same aggregate exercise price to exercise such portion of the Option and shall
then hold the same class and aggregate number of shares as if the Employee had
exercised such portion of the Option immediately prior to such occurrence.
2. Recapitalization. In the event of (A) a dissolution, liquidation,
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or sale of all or substantially all of the assets of the
Company, or (B) a merger or consolidation in which the Company is not the
surviving entity, or (C) a merger in which the Company is the surviving entity
but the shares of the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other securities, cash, or
other property, then, at the sole discretion of the Board and to the extent
permitted by applicable law, the Option:
(1) shall terminate upon such event and may be exercised prior thereto
only to the extent the Option was then exercisable; or
(2) shall terminate upon such event, or such date prior to the
consummation of the event as the Board may determine, but shall become
fully exercisable as to all shares upon the consummation of such event or
on such date determined by the Board; or
(3) shall continue in full force and effect and, if applicable, the
surviving entity shall assume the Option and/or shall substitute a similar
option for the Option; or
(4) shall be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, sale of assets or other
similar agreement.
8. Method of Exercising Option; Investment Representation. Subject to the
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terms and conditions of this Agreement, the Option may be exercised by written
notice to the Company at its main office. Such notice shall be in a form
reasonably satisfactory to the Company and shall state the election to exercise
the Option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising the Option. Such
notice shall be accompanied by payment of the full purchase price of such shares
in cash or by check. The Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the notice shall be
received. 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 Employee and
shall be delivered as provided above to or upon the written order of the person
or persons exercising the Option. In the event the Option shall be exercised
pursuant to Section 6 hereof after the death of the Employee, such notice shall
be accompanied by appropriate proof of the right of such person or persons to
exercise the Option. All shares purchased upon the exercise of the Option as
provided herein shall be fully paid and nonassessable.
The shares purchasable upon the exercise of options granted under the
Plan have not been registered under the Federal Securities Act of 1933 (the
"Act"), or qualified under the California Corporate Securities Law of 1968 (the
"Law"). Therefore, unless the Option
Shares are so registered and qualified prior to Employee acquiring them by
exercising the Option, the Option Shares shall be subject to the following
restrictions and all certificates representing the Option Shares shall bear
conspicuous legends containing said restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") IN RELIANCE IN PART ON THE EXEMPTION
PROVIDED BY RULE 701, OR QUALIFIED UNDER THE CALIFORNIA
CORPORATE SECURITIES LAW OF 1968 (THE "LAW"). THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND CONSTITUTE RESTRICTED
SECURITIES FOR PURPOSES OF RULE 144. NEITHER SAID SHARES NOR
ANY INTEREST THEREIN MAY BE TRANSFERRED, SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT AND QUALIFICATION UNDER THE
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED AS TO SAID TRANSFER, SALE OR OFFER.
Until registration of the Option Shares under the Act and
qualification under the Law, the notice of exercise shall require the Employee
to represent that the Employee is acquiring the Option Shares for the Employee's
own account, for investment, and not for purposes of resale or distribution and
each subsequent purchaser shall be required to so represent until such
registration. The Company may prohibit any sale or transfer of any interest in
the Option Shares by a person so representing for one year (or such longer time
as the Company reasonably deems appropriate) if such person cannot demonstrate
to the satisfaction of the Company that such sale or transfer was occasioned by
circumstances which had changed from the date such person made such
representation and that such representation was therefore truthful when made.
9. Disposition of Shares. The Employee agrees to notify the Company in
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writing of any sale or transfer of any Option Shares which takes place either
within two years from the Date of Grant or within one year from the issuance of
Option Shares to the Employee pursuant to exercise of the Option. Such notice
shall be given to the Company within ten (10) days of the sale or transfer and
shall set forth the price and terms of any such sale or transfer.
10. Right of First Refusal.
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1. Initiation of Right of First Refusal. Until a public offering of
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the Company's Common Stock has occurred with proceeds to
the Company of at least Ten Million Dollars ($10,000,000) and a per share price
valuing the Company's total outstanding Common Stock at least Forty-Five Million
Dollars ($45,000,000), the Employee (which for purposes of this Section 10 shall
include the Employee's heirs, executors, administrators and transferees, and
shall be referred to as the "Shareholder") shall not sell pledge, assign, or
otherwise transfer any of the Shareholder's interest in any of the Option Shares
acquired upon exercise of the Option without first offering to the Company or
its designees the right and option to purchase said shares as provided
hereinafter in this Section 10 (the "Right of First Refusal"). Notwithstanding
the above, the Employee may sell or transfer any interest in any of said Option
Shares to the Employee's spouse or children, or to a trustee or custodian for
the benefit of the Employee or Employee's spouse or children (collectively,
"Permitted Transferees") without first offering said Option Shares to the
Company or its designees, provided such buyer or transferee agrees in writing to
be bound by the restrictions set forth in this Section 10 and Section 8 of this
Agreement.
In the event of a pledge or other hypothecation of the Option Shares,
or the granting of any option or other right to purchase the Option Shares, then
the Right of First Refusal shall come into existence at the time of any sale or
transfer of ownership of the Option Shares pursuant to the foreclosure under
such pledge or hypothecation or exercise of such option or right, as the case
may be; provided, however, that Employee may not pledge or hypothecate the
Option Shares or grant an option or right to purchase the Option Shares unless
the pledge holder or option or right holder, as the case may be, agrees in
writing at the time of the pledge or grant of the option or right to be bound by
the Right of First Refusal as contained in this Section 10 and to cause any
proposed assignee or transferee of such pledge or right or option to execute and
deliver to the Company a similar writing prior to such assignment or transfer.
2. Mechanics. Any Shareholder desiring to sell any or all of the
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Option Shares during such time period shall give written notice to the Company
of the Shareholder's bona fide intention to sell the Option Shares pursuant to a
bona fide written offer of a third party other than the Company (the "Proposed
Purchaser"). The notice shall include a photocopy of such written offer which
shall specify the identity of the Proposed Purchaser, the number of such Option
Shares proposed to be sold (hereinafter the "Offered Shares"), and the price and
payment terms of the proposed offer to buy the Offered Shares. The payment terms
of the Proposed Purchaser to the Shareholder (and of the Shareholder to the
Company) must be cash, cash equivalent (a certificate of deposit, shares of
stock in a publicly traded company, and the like), or a promissory note of the
Proposed Purchaser payable on date(s) specified by passage of time. The Company
or its designees shall have the right and option to purchase
the Offered Shares, at the price and on the payment terms specified in the
Shareholder's notice, for a period of sixty (60) days from receipt of said
notice from the Shareholder. That is, such notice by the Shareholder constitutes
an irrevocable offer by the Shareholder to sell the Offered Shares to the
Company or its designees at the price and payment terms specified in such notice
for sixty (60) days from the Company's receipt of such notice.
The Company shall exercise its option by giving written notice (the
"Original Notice") to the Shareholder stating that it is exercising its option.
The Company may not exercise the option as to fewer than all of the Offered
Shares. The Shareholder shall deliver certificates representing the Offered
Shares purchased by the Company or its designees against payment for the account
of the Shareholder of the purchase price in compliance with the terms of the
bona fide offer within thirty (30) days of the option exercise notice.
In the event both the Company and its designees fail to exercise their
option as provided in this section, the Offered Shares may be sold by the
Shareholder to the Proposed Purchaser within a period of sixty (60) days
following the end of the Company's sixty (60)-day option period specified above,
provided that (1) such sale is made at a price and on terms no more favorable to
the Proposed Purchaser than those made available to the Company and its
designees under this section, (2) the Proposed Purchaser delivers a written
undertaking to the Company to be bound by the restrictions on the Option Shares
set forth in this Section 10 and Section 8 of this Agreement, and (3) the
Company receives an opinion of counsel reasonably satisfactory to it that the
sale to the Proposed Purchaser complies with applicable federal and state
corporate securities laws.
Upon receipt of a writing from Shareholder and Proposed Purchaser that
the foregoing conditions have been satisfied and the purchase price paid to the
Shareholder by the Proposed Purchasers, the Company shall transfer the ownership
of record to the Proposed Purchaser (and reissue the certificate).
If within this sixty (60)-day period the Shareholder does not enter
into an agreement for such a sale of Offered Shares to the Proposed Purchaser
which is consummated within thirty (30) days of the execution thereof, the Right
of First Refusal shall be revived as to the Offered Shares which shall not be
sold or transferred unless the Shareholder first offers the Company the right
and option to repurchase all such Option Shares in accordance with this Section.
Any transfer or purported transfer of the Option Shares or any
interest therein shall be null and void unless the terms and conditions of this
Section 10 are strictly observed and followed, or
such terms and conditions are waived by the Company's Board of Directors.
In addition to the other legends described in this Agreement, all
certificates representing the Option Shares shall bear the following legend:
THESE SHARES ARE ALSO SUBJECT TO CERTAIN TRANSFER RESTRICTIONS,
INCLUDING A RIGHT OF FIRST REFUSAL, AS SET FORTH IN AN INCENTIVE STOCK
OPTION AGREEMENT ON FILE WITH THE SECRETARY.
11. Notices. Any notice required to be given pursuant to this Agreement
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shall be deemed effectively given (i) to the Company upon personal delivery to
the Company's President, or three (3) days after it is deposited in the U.S.
mail, by registered or certified mail, postage prepaid and addressed to the
Company at it principal executive office, Attention: President, and (ii) to the
Employee upon personal delivery or three (3) days after it is deposited in the
U.S. mail, by registered or certified mail, postage prepaid and addressed to the
Employee at his address appearing in the General Option Information section of
this Agreement. Either party may designate another address for purposes of
receiving notices under this Agreement by giving written notice to the other
party of such new address in accordance with this section.
12. Delivery of Plan. The Employee acknowledges that the Employee has
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received from the Company a copy of the Plan pursuant to which this Agreement is
made and entered into.
13. Tax Advice. The Employee represents that he has not relied upon any
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tax advice from the Company or its counsel with respect to this Agreement.
14. Confidentiality and Financial Information.
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1. Confidentiality. The Company has a general policy of maintaining
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the confidentiality of certain corporate records. The Employee shall be subject
to such policy and all certificates representing the Option Shares shall bear
the following legend:
THE HOLDER OF RECORD OF THESE SHARES, AND SUCH HOLDER'S
AGENTS AND ATTORNEYS, MAY BE REQUIRED TO EXECUTE
NONDISCLOSURE STATEMENTS PRIOR TO BEING PERMITTED TO INSPECT
CERTAIN RECORDS OF THE COMPANY.
2. Financial Information. Whenever the Company provides financial
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statements, whether audited or unaudited, to all of its
shareholders as a group, the Company shall concurrently provide the Employee
with a copy of such financial statements. Notwithstanding the foregoing, the
Company shall provide the Employee at the end of its fiscal year with a copy of
its financial statements, either audited or unaudited, for such fiscal year,
within ninety (90) days after the end of such fiscal year, if this Option is
then still in effect.
The Employee acknowledges that such financial statements are
confidential information of the Company and are being provided solely in order
to assist Employee in the decision of whether and when to exercise the Option.
The Employee agrees (1) to maintain the confidentiality of all such financial
statements and not to disclose the contents of such financial statements to any
third party without the prior written consent of an officer of the Company and
(2) not to use such financial statements for any other purpose.
Authorized Signatures
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In order to bind the parties to the terms and conditions of this Incentive
Stock Option Agreement, the parties or their duly authorized representatives
have signed their names below.
Gamma Precision Technology, Inc. Employee
By:_______________________ _________________________
President Signature
