<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997
REGISTRATION NO. 333-_____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------
GIGA-TRONICS INCORPORATED
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2656341
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
4650 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
(Address of Principal Executive Offices) (Zip Code)
----------------------
GIGA-TRONICS INCORPORATED RESTATED 1990 STOCK OPTION PLAN
(Full title of the Plan)
----------------------
GEORGE H. BRUNS, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GIGA-TRONICS INCORPORATED
4650 NORRIS CANYON ROAD, SAN RAMON, CALIFORNIA 94583
(Name and Address of Agent for Service)
(510) 328-4650
(Telephone number, including area code, of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities to Amount to be Offering Price Aggregate Amount of
be Registered Registered (1) per Share (2) Offering Price (2) Registration Fee(2)
------------- -------------- ------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Options to Purchase 700,000 N/A N/A N/A
Common Stock
Common Stock, no 700,000 shares $8.875 $4,987,500 $1608.54
par value
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Giga-tronics
Incorporated Restated 1990 Stock Option Plan by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an
increase in the number of the outstanding shares of Giga-tronics
Incorporated Common Stock.
(2) A Registration Statement on Form S-8 was filed with the Securities
and Exchange Commission on October 18, 1994, registering 400,000
shares of Common Stock, no par value, and Options to purchase such
Common Stock issuable pursuant to the Giga-tronics Incorporated
Restated 1990 Stock Option Plan
<PAGE> 2
(Registration No. 33-85278) and a registration fee for such shares of
Common Stock of $801.72 was paid in connection therewith.
Accordingly, the fee of $806.82 for the registration of 300,000
additional shares of Common Stock, no par value, and Options to
purchase such Common Stock accompanies this registration statement on
Form S-8 and is calculated solely for purposes of this offering under
Rule 457(h) of the Securities Act of 1933, as amended, on the basis
of the average of the high and low selling prices per share of Common
Stock of Giga-tronics Incorporated on October 27, 1997, as reported
on the Nasdaq National Market, for the additional shares of Common
Stock registered hereby.
================================================================================
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Giga-tronics Incorporated (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended March 29, 1997;
(b) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 28, 1997;
(c) The Registrant's Registration Statement No. 0-12719 on
Form 8-A filed with the SEC on July 27, 1984, in which
there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common Stock;
and
(d) The Registrant's Registration Statement on Form S-8
(Registration No. 33-85278) filed with the SEC on October
18, 1994.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act") after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Sections 204 and 317 of the California General Corporation Law and the
Registrant's Bylaws contain provisions authorizing the indemnification of
corporate directors and officers against certain liabilities and expenses
incurred in connection with proceedings involving such persons in their
capacities as directors and officers, including proceedings under the Securities
Act of 1933, as amended (the "1933 Act"), or the 1934 Act.
<PAGE> 4
Section 29 of the Registrant's Bylaws requires the Registrant to
indemnify all directors and officers to the fullest extent permitted by
California law and also provides for the advancement of expenses to officers and
directors in connection with their defense of civil or criminal proceedings upon
the written undertaking of the director or officer to repay the advance in the
event it is ultimately determined that such individual is not entitled to
indemnification under the California General Corporation Law.
In addition, the Registrant has entered into supplemental
indemnification agreements with its directors which broaden the scope of
indemnity beyond that expressly provided by the Bylaws and the California
General Corporation Law. These supplemental contracts are permissible under
California General Corporation Law and have been approved by the Registrant's
shareholders. The agreements provide the directors with indemnification to the
fullest possible extent permitted by law against all expenses (including
attorney fees), judgments, fines and settlement amounts incurred or paid by them
in any action or proceeding (including any action by or in the right of the
Registrant) by reason of their service either as a director, officer, employee
or agent of the Registrant or, at the Registrant's request, as a director,
officer, agent or employee of another company, partnership, joint venture, trust
or other enterprise. However, no indemnity will be provided to any director with
respect to conduct which is adjudged to be knowingly fraudulent, deliberately
dishonest or to constitute willful misconduct.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Shareholders. Reference is made to Registrant's
Registration Statement No. 0-12719 on Form 8-A which is incorporated herein by
reference pursuant to Item 3(c).
5 Opinion and consent of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Independent Auditors - KPMG Peat Marwick.
23.2 Consent of Gibson, Dunn & Crutcher is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Giga-tronics Incorporated Restated 1990 Stock Option Plan, as amended.
99.2 Notice of Grant of Stock Options with Stock Option Agreement (Employees).
99.3 Notice of Grant of Stock Options with Stock Option Agreement (Officers).
99.4 Non-Statutory Stock Option Agreement.
99.5 Non-Statutory Stock Option Agreement (Automatic/Non-Employee Director Grant).
</TABLE>
II-2
<PAGE> 5
Item 9. Undertaking
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (l)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof, and
(3) to remove from registration by means of a posteffective amendment any of the
securities being registered which remain unsold upon the termination of the
Registrant's Restated 1990 Stock Option Purchase Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions incorporated by reference in
Item 6, or otherwise, the Registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the 1933
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Ramon, State of California, on this 24th day
of October, 1997.
GIGA-TRONICS INCORPORATED
By: /s/ George H. Bruns, Jr.
-----------------------------------------------
George H. Bruns, Jr.
Chairman and Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Giga-tronics Incorporated, a
California corporation, do hereby constitute and appoint George H. Bruns, Jr.
and Mark H. Cosmez, II, and each of them, the lawful attorneys-in-fact and
agents with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and either one
of them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
II-4
<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ George H. Bruns, Jr. Chairman and Chief Executive Officer and October 24, 1997
- -------------------------------- Director (Principal Executive Officer)
George H. Bruns, Jr.
/s/ Mark H. Cosmez, II Chief Financial Officer and Vice-President, October 24, 1997
- -------------------------------- Finance (Principal Financial Officer and
Mark H. Cosmez, II Principal Accounting Officer)
Director
- --------------------------------
James A. Cole
/s/ Edward D. Sherman Director October 24, 1997
- --------------------------------
Edward D. Sherman
/s/ Robert C. Wilson Director October 26, 1997
- --------------------------------
Robert C. Wilson
</TABLE>
II-5
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
GIGA-TRONICS INCORPORATED
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Shareholders. Reference is made to Registrant's
Registration Statement No. 0-12719 on Form 8-A which is incorporated herein by
reference pursuant to Item 3(c).
5 Opinion and consent of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Independent Auditors - KPMG Peat Marwick.
23.2 Consent of Gibson, Dunn & Crutcher LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Giga-tronics Incorporated Restated 1990 Stock Option Plan.
99.2 Notice of Grant of Stock Options with Stock Option Agreement (Employees).
99.3 Notice of Grant of Stock Options with Stock Option Agreement (Officers).
99.4 Non-Statutory Stock Option Agreement.
99.5 Non-Statutory Stock Option Agreement (Non-Employee Director Grant).
</TABLE>
<PAGE> 1
[Letterhead of Gibson, Dunn & Crutcher LLP]
October 31, 1997 C35517-00001
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, CA 94583
Re: Registration Statement on Form S-8 of Giga-tronics Incorporated
---------------------------------------------------------------
Ladies and Gentlemen:
We refer to the registration statement on Form S-8 ("Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities Act")
filed by Giga-tronics Incorporated, a California corporation (the "Company"),
with respect to the offering by the Company of up to 700,000 shares (the
"Shares") of the common stock of the Company, no par value per share (the
"Common Stock") pursuant to the Giga-tronics Incorporated Restated 1990 Stock
Option Plan (the "Plan"), including 400,000 shares for which a Registration
Statement on Form S-8 was filed with the Securities and Exchange Commission on
October 18, 1994 (Registration No. 33-85278) and 300,000 additional shares (the
"New Shares") registered by the Registration Statement of even date herewith.
We have examined the originals or certified copies of such corporate
records, certificates of officers of the Company and/or public officials and
such other documents and have made such other factual and legal investigations
as we have deemed relevant and necessary as the basis for the opinions set
forth below. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as conformed
or photostatic copies and the authenticity of the originals of such copies.
Based on our examination mentioned above, subject to the assumptions
stated above and relying on the statements of fact contained in the documents
that we have examined, we are of the opinion that (i) the issuance by the
Company of the New Shares has been duly authorized and (ii) when issued in
accordance with the terms of the Plan, the New Shares will be duly and validly
issued, fully paid and non-assessable shares of Common Stock.
This opinion is limited to California and United States federal law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
<PAGE> 1
Consent of Independent Auditors
The Board of Directors
Giga-tronics Incorporated
We consent to incorporation by reference in the registration statement dated
October 30, 1997, on Form S-8 of Giga-tronics Incorporated of our report dated
April 18, 1997, except as to Note 11, which is as of June 6, 1997, relating to
the consolidated balance sheets of Giga-tronics Incorporated and subsidiary as
of March 29, 1997, and March 30, 1996, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the years ended March
29, 1997, March 30, 1996, and March 25, 1995, and the related schedule, which
reports appear or are incorporated by reference in the March 29, 1997, annual
report on Form 10-K of Giga-tronics Incorporated.
/s/ KPMG Peat Marwick LLP
San Jose, California
October 31, 1997
<PAGE> 1
GIGA-TRONICS INCORPORATED
RESTATED 1990 STOCK OPTION PLAN
AS AMENDED JUNE 20, 1997
<PAGE> 2
ARTICLE ONE
GENERAL PROVISIONS
1. PURPOSES OF THE PLAN
A. This Restated 1990 Stock Option Plan (the "Plan"), as restated
effective July 23, 1992 and amended May 17, 1994 and June 20, 1997,is intended
to promote the interests of Giga-tronics Incorporated, a California corporation
(the "Company"), by providing a method whereby the Company's employes are to be
offered equity incentives intended to encourage such individuals to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Company and to continue to render services to the Company or its parent or
subsidiary corporations.
B. For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Company's Board of Directors.
COMMON STOCK: The Common Stock issuable under the Plan shall be
shares of the Company's common stock, no par value.
DISABILITY: The permanent incapacity of an individual, by reason
of physical or mental illness, to perform his/her usual duties for the
Company. Disability shall be determined by the Committee after
consideration of such medical evidence as it may require.
EMPLOYEE: An individual shall be considered to be an Employee
for so long as such individual remains in the employ of the Company or one
or more of its parent or subsidiary corporations.
FAIR MARKET VALUE: The Fair Market Value per share of Common
Stock on any relevant date under the Plan shall be the mean between the
highest bid and lowest asked prices (or, if such information is available,
the closing selling price) per share of Common Stock on such date in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market (or any
successor system). Should the Common Stock become traded on a national
securities exchange, then the Fair market Value per share shall be the
closing selling price on such exchange on the date in question, as such
price is quoted on the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on the over-the-counter market
(or national securities exchange) on the date in question, then the Fair
Market Value shall be the mean between the highest bid and lowest asked
prices (or closing selling price) on the last preceding date for which
such quotations exist.
<PAGE> 3
PARENT: A corporation shall be deemed to be a parent of the
Company if it is a corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, provided each such
corporation in the unbroken chain (other than the Company) owns, at
the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
SECTION 16(B) INSIDER: An individual shall be considered to be a
Section 16(b) Insider on any relevant date under the Plan if such
individual is at the time subject to the short-swing profit
restrictions of Section 16(b) of the Securities Exchange Act of 1934
by reason of his or her affiliation with the Company.
SERVICE: An individual shall be deemed to be in the Service of
the Company for so long as such individual (i) renders service on a
periodic basis to the Company or one or more of its parent or
subsidiary corporations as an Employee or (ii) serves as a
non-employee member of the Company's Board of Directors.
SUBSIDIARY: A corporation shall be deemed to be a subsidiary of
the Company if it is one of the corporations (other than the Company)
in an unbroken chain of corporations beginning with the Company,
provided each such corporation (other than the last corporation in the
unbroken chain) owns, at the time of determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. For
purposes of all non-statutory option grants under Article Two and all
Corporate Transaction provisions of the Plan, the term "subsidiary"
shall also include any partnership, joint venture or other business
entity of which the Company owns, directly or indirectly through
another subsidiary corporation, more than a fifty percent (50%)
interest in voting power, capital or profits.
C. Stock option grants made to any individual under the Plan shall
not in any way affect, limit or restrict such individual's eligibility to
participate in any other stock plan or other compensation or benefit plan,
arrangement or practice now or hereafter maintained by the Company or any parent
or subsidiary corporation.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by a committee (the "Committee")
of two (2) or more Board members appointed by the Board. The Board shall have
the authority to fill any and all vacancies on the Committee, however caused.
B. Subject to the express provisions of the Plan, the Committee
shall have plenary authority:
(i) to make discretionary option grants to Employees under the
Discretionary Option Grant Program set forth in Article Two;
2
<PAGE> 4
(ii) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations
deemed necessary or advisable in administering the Plan; and
(iii) to change the terms and conditions of any outstanding
option grant under the Discretionary Option Grant Program, provided such action
does not, without the consent of the holder, adversely affect the rights and
obligations such individual may have under the Plan or the outstanding grant.
C. Determinations of the Committee on all matters relating to the
Plan and any option grants or stock issuances made hereunder shall be final,
binding and conclusive on all persons having any interest in the Plan or any
options granted or shares issued under the Plan.
III. PLAN STRUCTURE AND ELIGIBILITY
A. The Plan as amended May 1994 shall consist only of the
Discretionary Option Grant Program set forth in Article Two. The terms and
provisions of Articles One and Five of the Plan shall also be applicable to
such program.
B. The individuals eligible to participate in the Discretionary
Option Grant Program ("Optionees") shall be limited to Employees (including
officers and directors) of the Company or its parent or subsidiary
corporations. Non-employee members of the Board shall not be eligible to
participate in the Discretionary Option Grant Program.
C. Members of the Committee shall not, during their period of
Committee service, participate in the Discretionary Option Grant Program of
Article II of this Plan or in any other stock option, stock bonus, stock
purchase or stock plan of the Company or its parent or subsidiary corporations.
IV. STOCK SUBJECT TO THE PLAN
A. The Common Stock issuable under the Plan shall be made available
either from authorized but unissued shares of Common Stock or from shares of
Common Stock reacquired by the Company on the open market. The aggregate number
of shares of Common Stock issuable over the term of this Plan shall not exceed
700,000 shares (subject to adjustment from time to time in accordance with
paragraph C. below).
B. Should an option expire or terminate for any reason prior to
exercise or surrender in full (including options cancelled in accordance with
the cancellation-regrant provisions of Article Two below), the shares subject
to the portion of the option not so exercised or surrendered shall be available
for subsequent option grants under the Plan. Shares subject to any stock
appreciation rights exercised in accordance with the Stock Appreciation Right
provisions of Articles Two and all share issuances under the Plan shall reduce
on a share-for-
3.
<PAGE> 5
share basis the number of shares of Common Stock available for subsequent
option grants under this Plan. If the exercise price of an outstanding option
under the Plan is paid with shares of Common Stock or if shares of Common Stock
otherwise issuable under the Plan are withheld by the Company in satisfaction
of the withholding taxes incurred in connection with the exercise of an
outstanding option under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares
of Common Stock actually issued.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made to (i) the maximum number and/or class of shares issuable under
this Plan, to reflect the effect of such change upon the Company's capital
structure, (ii) the class and/or maximum number of securities for which stock
options and separately exercisable stock appreciation rights may be granted to
any one participant in the aggregate after April 30, 1994 and (iii) the number
and/or class of shares and the exercise price per share of the stock subject to
each outstanding option in order to preclude the dilution or enlargement of
benefits thereunder. The adjustments determined by the Committee shall be
final, binding and conclusive.
D. In the event that (i) the Company is the surviving entity in any
Corporate Transaction which does not result in the termination of outstanding
options pursuant to the Corporate Transaction provisions of the Plan or (ii) the
outstanding options under the Plan are to be assumed in connection with such
Corporate Transaction, then each such continuing or assumed option shall,
immediately after such Corporate Transaction, be appropriately adjusted to
apply and pertain to the number and class of securities which would be issuable,
in consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, provided the aggregate option price shall
remain the same, and to the number and class of securities which remain issuable
under this Plan.
E. In no event may any one individual participating in the Plan be
granted stock options and separately exercisable stock appreciation rights for
more than 200,000 shares in the aggregate over the remaining term of the Plan,
subject to adjustment from time to time in accordance with paragraph C. above.
For purposes of such limitation, no stock options or stock appreciation rights
granted prior to May 1, 1994 shall be taken into account.
4.
<PAGE> 6
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
A. The Committee shall have plenary authority (subject to the
express provisions of the Plan) to determine which Employees are to be granted
options under this Discretionary Option Grant Program, the number of shares to
be covered by each such option, the status of the granted option as either an
incentive stock option which meets the requirements of Section 422 of the
Internal Revenue Code ("Incentive Option") or a non-statutory option not
intended to meet such requirements, the time or times at which such option is
to become exercisable and the maximum term for which the option is to remain
outstanding.
B. The granted options shall be evidenced by instruments in such
form as the Committee shall from time to time approve; provided however, that
each such instrument shall comply with and incorporate the terms and conditions
specified below.
1. Option Price.
a. The option price per share shall be fixed by the Committee, but
in no event shall the option price per share be less than eighty percent (80%)
of the Fair Market Value per share of Common Stock on the date of the option
grant.
b. The option price shall become immediately due upon exercise of
the option and shall, subject to the loan provisions of this Article Two, be
payable in one of the alternative forms specified below:
(A) full payment in cash or check made payable to the Company's
order;
or
(B) full payment in shares of Common Stock held by the Optionee
for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at Fair Market Value on the Exercise Date (as
such term is defined below); or
(C) full payment in a combination of shares of Common Stock
held by the Optionee for the requisite period necessary to avoid a charge
to the Company's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check made payable to the Company's order; or
(D) full payment through a sale and remittance procedure
pursuant to which the Optionee (I) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the
5.
<PAGE> 7
Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Company by reason of such
purchase and (II) shall concurrently provide written directives to the
Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.
c. For purposes of subparagraph b. above, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the option price for the
purchased shares must accompany the exercise notice.
2. Term and Exercise of Options.
a. Each option granted under this Discretionary Option Grant
Program shall be exercisable in one or more installments over the Optionee's
period of Service as shall be determined by the Committee and shall be set
forth in the instrument evidencing such option; provided, however, that (i) no
such option shall become exercisable in whole or in part within the first six
(6) months after the grant date, except as otherwise provided in Section III of
this Article Two and (ii) no such option shall have a term in excess of ten
(10) years from the grant date.
b. During the lifetime of the optionee, the option, together with
any stock appreciation rights pertaining to such option, shall be exercisable
only by the optionee and shall not be assignable or transferable by the
optionee other than a transfer of the option effected by will or by the laws of
descent and distribution following the optionee's death.
3. Termination of Service.
a. Should an Optionee cease to continue in Service for any reason
(other than termination set forth in subparagraph c. below) while the holder of
one or more outstanding options under this Discretionary Option Grant Program,
then such options shall not be exercisable at any time after the earlier of (i)
the specified expiration date of the option term or (ii) the expiration of the
limited period of time (not to exceed twelve (12) months after the Optionee's
cessation of Service) specified by the Committee in the option agreement. Each
such option shall, during the applicable period following cessation of Service,
be exercisable only to the extent of the number of shares (if any) in which the
Optionee is vested on the date of such cessation of Service.
b. Any option granted to an Optionee under this Discretionary
Option Grant Program and outstanding in whole or in part on the date of the
Optionee's death may be subsequently exercised but only to the extent of the
number of shares (if any) in which the Optionee is vested on the date of
his/her cessation of Service (less any shares subsequently purchased by the
optionee prior to death), by the personal representative of the Optionee's
estate
6.
<PAGE> 8
or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. Any
such exercise must occur prior to the earlier of (i) the expiration date of the
option term or (ii) the expiration of the limited period of time (not to exceed
twelve (12) months following the Optionee's cessation of Service) specified by
the Committee in the option agreement.
c. If the Optionee's Service is terminated for any of the following
reasons, then all outstanding options granted the Optionee under this
Discretionary Option Grant Program shall immediately terminate and cease to be
exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business and
operations of the Company or any parent or subsidiary corporation employing
Optionee;
(2) Optionee's unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the Company or its
parent or subsidiary corporations; or
(3) Optionee's commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or
commission of a crime or other offense involving money or other property of
the Company or any parent or subsidiary corporation employing Optionee.
The reasons for termination of Optionee's Service set forth in
this subparagraph c. are not intended to be, and are not inclusive of, all acts
or omissions which the Company may deem to constitute misconduct or other
grounds for terminating the Optionee's (or any other individual's) Service.
d. The Committee shall have complete discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to establish as a provision applicable to the exercise of one or
more options granted under this Discretionary Option Grant Program that during
the limited period of exercisability following cessation of Service, the option
may be exercised not only with respect to the number of shares in which the
Optionee is vested at the time of such cessation of Service but also with
respect to one or more subsequent installments of purchasable shares in which
the Optionee would otherwise have vested had the Optionee continued in Service.
In addition, the Committee shall have similar discretion to extend the period of
time during which the option is to remain exercisable following the optionee's
cessation of Service, but in no event shall such period extend beyond the
specified expiration date of the option term.
4. Shareholder Rights. An option holder shall have none of the
rights of a shareholder with respect to any shares covered by the option until
such individual shall have exercised the option, paid the option price and
satisfied all other conditions precedent to the
7
<PAGE> 9
issuance of certificates for the purchased shares.
II. STOCK APPRECIATION RIGHTS
A. Each Section 16(b) Insider shall have a limited stock
appreciation right ("Limited Right") in tandem with each option grant (whether
an Incentive Option or a non-statutory option) made to such individual under
this Discretionary Option Grant Program. The Limited Right shall entitle the
Section 16(b) Insider to surrender the underlying option in connection with a
Change in Control (as defined below) for an appreciation distribution from the
Company in an amount equal to the excess of (I) the Change in Control Price (as
defined below) of the number of shares in which the Section 16(b) Insider is at
the time vested under the surrendered option over (II) the aggregate option
price payable for such vested shares.
B. The terms and conditions applicable to each such Limited Right
shall be as follows:
1. The option may only be surrendered during the thirty
(30)-day period following the Change in Control. However, the Section 16(b)
Insider may not surrender any option which (I) has not been outstanding for
at least six (6) months prior to the surrender date and (II) is not at the
time exercisable for any vested shares.
2. For purposes of calculating the appreciation distribution
payable by the Company on each surrendered option, the Change in Control
Price per share of the vested Common Stock subject to the surrendered
option shall be deemed to be equal to the greater of (a) the Fair Market
Value per share on the option surrender date or (b) the highest reported
price per share paid in effecting the Change in Control. However, if the
option is an Incentive Option, then the Change in Control Price of the
vested shares subject to the surrendered option shall not exceed the value
per share determined under clause (a) above.
3. The appreciation distribution shall be made entirely in
cash, and neither the approval of the Committee nor the consent of the
Board shall be required in connection with such surrender and distribution.
The shares of Common Stock subject to each surrendered option shall not be
available for subsequent issuance under this Plan.
4. A Change in Control shall be deemed to occur in the event
any of the following transactions is effected:
(i) the acquisition by a person or group of related
persons, other than the Company or any person controlling, controlled
by or under common control with the Company, of beneficial ownership
(as determined pursuant to the provisions of
8.
<PAGE> 10
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities pursuant
to a transaction or series of related transactions which the Board does not
approve; or
(ii) the first date within any period of twelve (12) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (A)
have been members of the Board continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination
was approved by the Board.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any of the following transactions (a "Corporate
Transaction") to which the Company is a party and for which the approval of the
Company's shareholders is obtained:
(i) 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.
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company to any entity other than a parent or
subsidiary of the Company, or
(iii) 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,
the exercisability of each option outstanding under this Discretionary
Option Grant Program (whether or not such option has been outstanding for a
period of six (6) months 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, the instrument evidencing an option
grant under this Discretionary Option Grant Program may provide that such option
shall not be so accelerated if and to the extent: (i) such option is, in
connection with the Corporate Transaction, either to be
9.
<PAGE> 11
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, or (ii) such option is to be replaced by a
comparable cash incentive program of the successor corporation based on the
value of the option at the time of the Corporate Transaction, or (iii) the
acceleration of such option is subject to other applicable limitations imposed
by the Committee at the time of grant. The determination of comparability under
clause (i) or (ii) above shall be made by the Committee, and its determination
shall be final, binding and conclusive. The Committee shall have the discretion,
exercisable either in advance of any actually-anticipated Corporate Transaction
or at the time of an actual Corporate Transaction, to provide (upon such terms
and conditions as it may deem appropriate) for either the automatic acceleration
of one or more assumed or replaced options which are not otherwise to be
accelerated in connection with the Corporate Transaction or the automatic
vesting of any cash incentive programs implemented in replacement of such
options, in the event the Optionee's employment should subsequently terminate
within a designated period following the effective date of such Corporate
Transaction.
B. Immediately following the consummation of the Corporate Transaction,
all outstanding options under this Discretionary Option Grant Program shall, to
the extent not previously exercised or assumed by the successor corporation or
its parent company, terminate and cease to be outstanding.
C. Upon the occurrence of any of the following transactions (a "Change
in Control"):
(i) the acquisition by a person or group of related persons,
other than the Company or any person controlling, controlled by or under
common control with the Company, of beneficial ownership (as determined
pursuant to the provisions of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the Company's then
outstanding securities pursuant to a transaction or series of related
transactions which the Board does not approve; or
(ii) the first date within any period of twelve (12) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (A)
have been members of the Board continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination
was approved by the Board;
the exercisability of each option outstanding under this Discretionary
Option Grant Program (whether or not such option has been outstanding for a
period of six (6) months) shall
10.
<PAGE> 12
be automatically accelerated so that each such option shall become exercisable,
immediately prior to such Change in Control, for the full number of shares
purchasable under such option and may be exercised for all or any portion of
such shares at any time thereafter until the expiration or sooner termination of
the option term. However, an outstanding option under this Discretionary Option
Grant Program shall not be so accelerated if and to the extent one or more
limitations imposed by the Committee at the time of grant preclude such
acceleration upon a Change in Control. The Committee shall have the discretion,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide (upon such terms and
conditions as it may deem appropriate) for the automatic acceleration of one or
more outstanding options which are not otherwise to be accelerated upon a Change
in Control, in the event the Optionee's employment should subsequently terminate
within a designated period following the effective date of such Change in
Control.
11.
<PAGE> 13
D. In the event a particular transaction qualifies as both a
Corporate Transaction and a Change in Control, the provisions of Section III.A
shall be controlling.
E. The grant of options under this Discretionary Option Grant
Program 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.
IV. INCENTIVE OPTIONS
A. The terms and conditions specified below shall be applicable to
all Incentive Options granted under this Discretionary Option Grant Program.
Options which are specifically designated as "non-statutory" options when issued
under this Discretionary Option Grant Program shall not be subject to such terms
and conditions.
1. Option Price. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock
on the grant date.
2. 10% Stockholder. If any individual to whom an Incentive
Option is to be granted pursuant to the provisions of this Discretionary
Option Grant Program is on the grant date the owner of stock (as determined
under Section 425(d) of the Internal Revenue Code) possessing 10% or more
of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations (such person to be
herein referred to as a 10% Stockholder), then (i) the option price per
share shall not be less than one hundred and ten percent (110%) of the Fair
Market Value per share of Common Stock on the grant date and (ii) the
maximum term of the option shall not exceed five (5) years from the grant
date.
3. Dollar Limitation. The aggregate fair market value
(determined on the basis of the Fair Market Value in effect on the
respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option
plan of the Company or its parent or subsidiary corporations) may for the
first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars. ($100,000). To the extent the Employee holds two
or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability thereof
as incentive stock options under the Federal tax laws shall be applied on
the basis of the order in which such options are granted.
B. Except as modified by the preceding provisions of this Incentive
Options
12.
<PAGE> 14
section, all the provisions of this Discretionary Option Grant Program shall be
applicable to the Incentive Options granted hereunder.
V. CANCELLATION AND RE-GRANT OF OPTIONS
A. The Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under this Discretionary Option
Grant Program and to grant in substitution therefor new options under this Plan
covering the same or different numbers of shares of Common Stock but having an
option price per share not less than (i) eighty percent (80%) of the Fair
Market Value per share of Common Stock on the new grant date, or (ii) one
hundred percent (100%) of such Fair Market Value if the new option is to be an
Incentive Option, or (iii) one hundred and ten percent (110%) of such Fair
Market Value if the new option is to be an Incentive Option subject to the
provisions of Section IV.A.2.
VI. LOANS OR GUARANTEE OF LOANS
A. The Committee may assist any Employee (including any officer or
director) in the exercise of one or more outstanding options under this
Discretionary Option Grant Program by (a) authorizing the extension of a loan
to such Employee from the Company, (b) permitting the Employee to pay the
option price for the purchased Common Stock in installments over a period of
years or (c) authorizing a guarantee by the Company of a third-party loan to
the Employee. The terms of any loan, installment method of payment or
guarantee (including the interest rate and terms of repayment) shall be
established by the Committee in its sole discretion. Loans, installment
payments and guarantees may be granted without security or collateral, but the
maximum credit available to the optionee shall not exceed the sum of (i) the
aggregate option price of the purchased shares plus (ii) any Federal and State
income and employment tax liability incurred by the Employee in connection
with the exercise of the option.
13.
<PAGE> 15
ARTICLE THREE
MISCELLANEOUS
I. TAX WITHHOLDING
A. The Company's obligation to deliver shares or cash upon the
exercise or surrender of stock options or stock appreciation rights granted
under the Discretionary Option Grant Program shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements.
B. The Committee may, in its discretion and upon such terms and
conditions as it may deem appropriate (including the applicable safe-harbor
provisions of SEC Rule 16b-3 or any successor rule or regulation) provide any
or all holders of outstanding option grants under the Discretionary Option
Grant Program with the election to have the Company withhold, from the shares
of Common Stock purchased or issued pursuant to such options, a portion of
those shares with an aggregate Fair Market Value equal to the designated
percentage (any multiple of 5% specified by the Optionee) of the Federal and
State income taxes ("Taxes") incurred in connection with their acquisition. In
lieu of such direct withholding, one or more Optionees may also be granted the
right to deliver shares of Common Stock to the Company in satisfaction of such
Taxes. The withheld or delivered shares shall be valued at the Fair Market
Value on the applicable determination date for such Taxes or such other date
required by the applicable safe-harbor provisions of SEC Rule 16b-3.
II. AMENDMENT OF THE PLAN
A. Except to the extent otherwise provided in this Article Three,
the Board shall have the complete and exclusive authority to amend or modify
the Plan at any time. However, without the consent of the shareholders, the
Board may not make any other change with respect to which the Board determines
that shareholder approval is required by applicable law or regulatory standards.
14.
<PAGE> 16
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board on June 26, 1990 and
approved by the Company's shareholders at the 1990 Annual Meeting. The
Committee may grant stock options under the Discretionary Option Grant Program
at any time prior to the date fixed herein for termination of the Plan.
B. The Board amended and restated the Plan effective May 8, 1991 to
implement the automatic option grant program for certain non-employee Board
members and to conform the provisions of the Plan to recent changes in the SEC
rules under Section 16 of the Securities Exchange Act of 1934 applicable to
transactions effected under the Plan by Section 16(b) Insiders. The May 1991
restatement was approved by the Company's shareholders at the 1991 Annual
Meeting. The May 1991 restatement was approved by the Company's shareholders at
the 1991 Annual Meeting. The May 1991 restatement shall apply only to options
granted under the Plan from and after the May 8, 1991 effective date. Each
option (together with any related stock appreciation right) issued and
outstanding under the Plan immediately prior to such effective date shall
continue to be governed by the terms and conditions of the Plan (and the option
agreement evidencing such option and stock appreciation right) as in effect on
the date such option was previously granted, and nothing in the May 1991
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares of Common Stock thereunder or the exercise of their outstanding stock
appreciation rights.
C. On July 23, 1992, the Board adopted a restatement of the Plan to
bring the Plan into compliance with recent SEC interpretive rulings under Rule
16b-3, as amended May 1, 1991, under the Securities Exchange Act of 1934. The
July 1992 restatement shall apply only to options granted under the Plan from
and after the July 23, 1992 effective date. Each option (together with any
related stock appreciation right) issued and outstanding under the Plan
immediately prior to such effective date shall continue to be governed by the
terms and conditions of the Plan (and the option agreement evidencing such
option and stock appreciation right) as in effect on the date such option was
previously granted, and nothing in the July 1992 restatement shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to the acquisition of shares of Common Stock thereunder or
the exercise of their outstanding stock appreciation rights.
D. The sale and remittance procedure for the exercise of
outstanding options shall be available for all options granted under the Plan
after April 30, 1991 and for all non-statutory options outstanding under the
Plan on such date. The Committee may also allow such procedure to be utilized
in connection with one or more disqualifying dispositions of Incentive Option
shares effected after such date.
15.
<PAGE> 17
E. On May 17, 1994, the Board amended the Plan to increase the
number of shares of Common Stock issuable over the term of the Plan by an
additional 100,000 shares, and such amendment was approved by the shareholders
at the 1994 Annual Meeting. In addition, the May 1994 amendment eliminated the
automatic option grant program previously in effect under the Plan for
non-employee Board members, retroactive to January 1, 1993.
F. On June 20, 1997, the board amended the Plan to increase the
number of shares of Common Stock issuable over the term of the Plan by an
additional 300,000 shares, and such amendment shall be submitted for
shareholder approval at the 1997 Annual Meeting. The 300,000-share increase
became effective immediately upon authorization by the Board, but no option
granted on the basis of such increase shall be exercisable unless and until the
increase shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained at the 1997 Annual Meeting, then any
options previously granted on the basis of the 300,000-share increase shall
terminate and no further options based on such increases shall be granted.
Those options granted under the Plan which are not based on such increase shall
remain outstanding in accordance with the terms and conditions of the
respective instruments evidencing such options, whether or not the requisite
shareholder approval is obtained. Subject to the foregoing limitations, the
Plan Administrator may grant options under the Plan at any time before the date
fixed herein for termination of the Plan. In addition, the June 1997 amendment
eliminated certain restrictions, including restrictions on amendments to the
Plan, as permitted by amendments to Rule 16b-3 issued by the Securities and
Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934.
G. The Plan shall in all events terminate upon the earlier of (i)
the tenth (10th) anniversary of the date of its adoption by the Board or (ii)
the date on which all shares available for issuance under the Plan shall have
been issued or cancelled pursuant to the exercise or surrender of stock options
and/or stock appreciation rights under the Plan. If the date of termination is
determined under clause (i) above, then any stock options and stock
appreciation rights at the time outstanding under the Plan shall continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants.
H. Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance
under the Plan, provided (i) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such option and within one year thereafter such amendment is
approved by the Company's shareholders and (ii) each option granted is not to
become exercisable, in whole or in part, at any time prior to the obtaining of
such shareholder approval.
16.
<PAGE> 18
IV. MISCELLANEOUS PROVISIONS
A. Any cash proceeds received by the Company from the issuance of
shares hereunder shall be used for general corporate purposes.
B. The implementation of the Plan, the granting of any stock option,
and the issuance of Common Stock hereunder, shall be subject to the Company's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, and the stock options granted under it and
the Common Stock issued pursuant to it.
C. Neither the action of the Company in establishing the Plan, nor
any action taken by the Board or the Committee hereunder, nor any provision of
the Plan itself shall be construed so as to grant any individual the right to
remain in the employ or service of the Company or any of its parent or
subsidiary corporations for any period of specific duration, and the Company
(or any parent or subsidiary retaining the services of such individual) may
terminate such individual's employment or service at any time and for any
reason, with or without cause.
D. Nothing contained in the Plan shall be construed to limit the
authority of the Company to exercise its corporate rights and powers, including
(without limitation) the right of the Company (a) to grant options for proper
corporate purposes otherwise than under this Plan to any Employee or other
person, firm or company or association or (b) to grant options to, or assume
the option of, any person in connection with the acquisition (by purchase,
lease, merger, consolidation or otherwise) of the business and assets (in whole
or in part) of any person, firm, company or association.
<PAGE> 1
GIGA-TRONICS INCORPORATED
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given to the following option grant (the "Option") made
to purchase shares of Giga-Tronics Incorporated (the "Company") common stock
(the "Common Stock") under the Company's Restated 1990 Stock Option Plan (the
"Plan"):
Optionee: ________________________________________
Grant Date: ______________________________________
Option Price: __________________________ per share
Number of Optioned Shares: _______________________
Expiration Date: _________________________________
Type of Option: __________________________________
Exercise Schedule: Provided Optionee remains in the service of the Company
(as defined in the Stock Option Agreement), the Option will become
exercisable in a series of four (4) equal and successive annual
installments, beginning one year after the Grant Date.
The Option is granted pursuant to the provisions of the Plan, and the
terms and conditions of the Option are as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
GIGA-TRONICS INCORPORATED
By __________________________
Title:_______________________
_____________________________
Optionee
Address: _____________________________
_____________________________
DATED: ______________, 199__
<PAGE> 2
EMPLOYEE
EXHIBIT A
GIGA-TRONICS INCORPORATED
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors of the Company (the "Board") has adopted
the Company's Restated 1990 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of key employees (including officers and
directors) who contribute to the financial success of the Company or its parent
or subsidiary corporations.
B. Optionee is an individual who is to render valuable services to
the Company or its parent or subsidiary corporations, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company's grant of a stock option to Optionee.
C. For purposes of this Agreement, the following definitions shall
be in effect:
Employee: Optionee shall be considered to be an Employee for so long
as such individual remains in the employ of the Company or one or more of
its Parent or Subsidiary corporations.
Fair Market Value: The Fair Market Value per share of Common Stock on
any relevant date under the Plan shall be the mean between the highest bid
and lowest asked prices (or, if such information is available, the closing
selling price) per share of Common Stock on such date in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers through the NASDAQ system (or any
successor system). Should the Common Stock become traded on a National
securities exchange, then the Fair Market Value per share shall be the
closing selling price on such exchange on the date in question, as such
price is quoted on the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on the over-the-counter market
(or national securities exchange) on the date in question, then the Fair
Market Value shall be the mean between the highest bid and lowest asked
prices (or closing selling
<PAGE> 3
price) on the last preceding date for which such quotations exist.
Parent: A corporation shall be deemed to be a Parent of the Company
if it is a corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each such corporation in the
unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Service: Optionee shall be deemed to be in the Service of the Company
for so long as such individual (i) renders services on a periodic basis to
the Company or one or more of its Parent or Subsidiary corporations as an
Employee or (ii) serves as a non-employee member of the Board.
Subsidiary: A corporation shall be deemed to be a Subsidiary of the
Company if it is a member of an unbroken chain of corporations beginning
with the Company provided each corporation in such chain (other than the
last corporation) owns, at the time of determination, stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. In the event this option is a
non-statutory option as specified in the Grant Notice, the term
"Subsidiary" shall also include any partnership, joint venture or other
business entity of which the Company owns, directly or indirectly through
another subsidiary corporation, more than a fifty percent (50%) interest
in voting power, capital or profits.
TERMS
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement, the Company hereby grants to Optionee, as of the
grant date (the "Grant Date") specified in the accompanying Notice of Grant of
Stock Option (the "Grant Notice"), a stock option to purchase up to that number
of shares of the Company's Common Stock (the "Optioned Shares") as is
specified in the Grant Notice. The Optioned Shares shall be purchasable from
time to time during the option term at the option price per share (the "Option
Price") specified in the Grant Notice.
2 Option Term. This option shall have a maximum term of five (5)
years measured from the Grant Date and shall accordingly expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5 or 7A of this
Agreement.
2.
<PAGE> 4
3. Transferability. This option shall not be transferable or
assignable by Optionee other than by will or by the laws of descent and
distribution. Accordingly, this option may be exercised, during Optionee's
lifetime, only by Optionee.
4. Exercisability. This option shall become exercisable for the
Optioned Shares in one or more installments as is specified in the Grant Notice.
As the option becomes exercisable in one or more installments, it shall remain
so exercisable until the Expiration Date or sooner termination of the option
term under Paragraph 5 or Paragraph 7A of this Agreement.
5. Termination of Service. In connection with the Optionee's cessation
of Service, the option term specified in Paragraph 2 shall terminate (and this
option shall cease to be exercisable) prior to the Expiration Date in accordance
with the following provisions:
(i) Except as otherwise provided in subparagraphs (ii) and (iii)
below, should the Optionee's Service with the Company terminate at any time
during the option term, then the period for exercising this option shall be
reduced to a twelve (12) month period commencing with the date of such
termination of Service, but in no event shall this option be exercisable at
any time after the Expiration Date. During such limited period of
exercisability, this option may not be exercised for more the number of
Optioned Shares (if any) for which the option is exercisable on the date of
Optionee's termination of Service(1). Upon the expiration of such twelve
(12) month period or (if earlier) upon the Expiration Date, the option
shall terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding, then the
personal representative of the Optionee's estate (or the person or persons
to whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution) shall have the right
to exercise this option for any or all of the Optioned Shares for which
this option is exercisable on the date of the Optionee's cessation of
Service. Such right shall lapse, and this option shall
- --------------
(1) In the event this option is an incentive stock option as specified in the
Grant Notice, the exercise of this option more than three (3) months after the
date of Optionee's cessation of Employee status for any reason (other than death
or permanent disability) will disqualify this option for favorable tax treatment
as further specified in Paragraph 17A.
3.
<PAGE> 5
cease to be exercisable, upon the earlier of (A) the expiration of the
twelve (12) month period measured from the date of Optionee's cessation of
Service or (B) the Expiration Date.
(iii) Should the Optionee's Service be terminated for any of the
following reasons, then this option shall terminate and cease to be
exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business
and operations of the Company or any Parent or Subsidiary corporation
employing Optionee;
(2) Optionee's unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the
Company or its Parent or Subsidiary corporations;
(3) Optionee's commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or
commission of a crime or other offense involving money or other
property of the Company or any Parent or Subsidiary corporation
employing Optionee.
The reasons for termination of Optionee's Service set forth in this
subparagraph (iii) are not intended to be, and are not inclusive of, all
acts or omissions which the Company may deem to constitute misconduct or
other grounds for terminating the Optionee's (or any other individual's)
Service.
6. Adjustment in Optioned Shares.
A. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock dividend, stock split, combination of shares,
exchange of shares, or other change affecting the outstanding Common Stock as a
class without receipt of consideration, the Plan Administrator shall make
appropriate adjustments to (a) the class and/or number of securities subject to
this option and (b) the Option Price payable per share in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
The adjustments so determined by the Plan Administrator shall be final, binding
and conclusive.
B. In the event that (i) the Company is the surviving entity in any
Corporate Transaction (within the meaning of Paragraph 7A) which does not
result in the termination of this
4.
<PAGE> 6
option pursuant to the provisions of Paragraph 7 or (ii) this option is to be
assumed in connection with such Corporate Transaction, then this option shall,
immediately after such Corporate Transaction, be appropriately adjusted to apply
and pertain to the number and class of securities which would be issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to this option immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to the
Option Price payable per share, provided the aggregate Option Price shall remain
the same.
7. Corporate Transaction/Change in Control.
A. Upon the occurrence of one or more of the following transactions
(a "Corporate Transaction"):
(i) 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,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company to any entity other than a
Parent or Subsidiary of the Company, or,
(iii) 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,
the exercisability of this option shall, to the extent it is not otherwise at
the time fully exercisable, be automatically accelerated so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Optioned Shares and may be
exercised for all or any portion of such shares. No such acceleration of this
option, however, shall occur if and to the extent (i) the option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof or (ii) the option is to be replaced by a comparable cash incentive
program of the successor corporation based on the option spread (the excess of
the Fair Market Value of the shares of the Common Stock at the time subject to
the option over the Option Price payable for such shares) at the time of the
Corporate Transaction. The determination of option comparability under
5.
<PAGE> 7
clause (i) or (ii) shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.
B. This option, to the extent not previously exercised, shall
terminate upon the consummation of the Corporate Transaction and cease to be
exercisable, unless it is expressly assumed by the successor corporation or
parent thereof.
C. Upon the occurrence of one or more of the following transactions
(a "Change in Control"):
(i) the acquisition by a person or group of related persons,
other than the Company or any person controlling, controlled by or
under common control with the Company, of beneficial ownership (as
determined pursuant to the provisions of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of securities of the
Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities pursuant to
a transaction or series of related transactions which the Board does
not approve; or
(ii) the first date within any period of thirty-six (36)
consecutive months or less on which there is effected any change in
the composition of the Board such that the majority of the Board
(determined by rounding up to the next whole number) ceases to be
comprised of individuals who either (I) have been members of the Board
continuously since the beginning of such period or (II) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (I)
who were still in office at the time such election or nomination was
approved by the Board;
the exercisability of this option (if outstanding at the time) shall be
automatically accelerated so that such option shall become exercisable,
immediately prior to the consummation of the Change in Control, for all of the
Optioned Shares and may be exercised for all or any portion of such shares at
any time thereafter until the expiration or sooner termination of the option
term.
D. This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this option shall
not have any of the rights of a shareholder with
6.
<PAGE> 8
respect to the Optioned Shares until such individual shall have exercised the
option, paid the Option Price for the purchased shares and satisfied all other
applicable conditions precedent to the issuance of the certificates for such
shares.
9. Manner of Exercising Option.
A. In order to exercise this option for one or more Optioned Shares for
which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee's death, the Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the Company a written
notice of exercise (the "Exercise Notice") in substantially the form of
Exhibit I attached hereto.
(ii) Pay the aggregate Option Price for the purchased shares in one
or more of the following alternative forms:
(1) full payment in cash or check made payable to the Company's
order; or
(2) full payment in shares of Common Stock held by the Optionee
for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at Fair Market Value on the Exercise Date
(as such term is defined below); or
(3) full payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at Fair Market Value on the Exercise Date
and cash or check.
(iii) Furnish to the Company appropriate documentation that the person
or persons exercising the option, if other than Optionee, have the right to
exercise this option.
B. The Option Price may also be paid through a sale and remittance
procedure. Pursuant to such procedure, Optionee (I) shall provide irrevocable
written instructions to a designated brokerage firm to effect the immediate
sale of the purchased Optioned Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate Option Price payable for such purchased shares plus all applicable
Federal and State income and employment taxes required
7.
<PAGE> 9
to be withheld by the Company by reason of such purchase and (II) shall
concurrently provide written directives to the Company to deliver the
certificates for the purchased Optioned Shares directly to such brokerage firm
in order to complete the sale transaction.
C. For purposes of this Agreement, the Exercise Date shall be the first
date on which the Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure of Paragraph 9B is
utilized, payment of the Option Price shall immediately become due and shall
accompany the Exercise Notice.
D. As soon as practical after the Exercise Date, the Company shall mail
or deliver to Optionee (or to the other person or persons exercising this
option) a certificate or certificates representing the purchased shares.
E. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and the Optionee
with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3 or 7A, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
12. Liability of Company.
A. If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained.
8.
<PAGE> 10
B. The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Company of any liability with respect to the non-issuance or sale of the Common
Stock as to which such approval shall not have been obtained. The Company,
however, shall use its best efforts to obtain all such approvals.
13. No Employment or Service Contract. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the Service of
the Company (or any Parent or Subsidiary employing or retaining Optionee) for
any period of time or otherwise interfere with or restrict in any way the
rights of the Company (or any Parent or Subsidiary employing or retaining
Optionee) or the Optionee, which rights are hereby expressly reserved by each,
to terminate the Optionee's Service at any time for any reason whatsoever, with
or without cause.
14. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an
interest in this option.
16. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
17. Additional Terms Applicable to an Incentive Stock Option. In the
event this option is an incentive stock option as specified in the Grant Notice,
the following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax treatment as an
incentive stock option under the Federal tax laws if (and to the extent) this
option is exercised for one or more Optioned Shares: (1) more than three (3)
months after the date the
9.
<PAGE> 11
Optionee ceases Employee status for any reason other than death or permanent
disability or (ii) more than one (1) year after the date the Optionee ceases
Employee status by reason of permanent disability.
For purposes of this Paragraph 17, Optionee shall be deemed to be
permanently disabled if Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) consecutive months or more, unable to
perform his/her usual duties for the Company or Subsidiary retaining his/her
services.
B. Except in the event of a Corporate Transaction or Change in Control
under Paragraph 7, this option shall not become exercisable in any calendar
year during which it is outstanding if (and to the extent) the aggregate fair
market value (determined at the Grant Date) of the Common Stock for which this
option would otherwise first become exercisable in such calendar year would,
when added to the aggregate fair market value (determined as of the respective
date or dates of grant) of the Common Stock for which this option or one or
more other post-1986 incentive stock options granted to the Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the Company
or any Parent or Subsidiary corporations) first become exercisable during the
same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion will first become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 17B would not
be contravened.
C. Should the exercisability of this option be accelerated upon a
Corporate Transaction or Change in Control in accordance with Paragraph 7, then
this option shall qualify for favorable tax treatment as an incentive stock
option under the Federal tax laws only to the extent the aggregate fair market
value (determined at the Grant Date) of the Common Stock for which this option
first becomes exercisable in the calendar year in which the Corporate
Transaction or Change in Control occurs does not, when added to the aggregate
fair market value (determined as of the respective date or dates of grant) of
the Common Stock for which this option or one or more other post-1986 incentive
stock options granted to the Optionee prior to the Grant Date (whether under
the Plan or any other option plan of the Company or any Parent or Subsidiary
corporations) first become exercisable during the same calendar year, exceed
One Hundred Thousand Dollars ($100,000) in the aggregate.
D. To the extent this option should fail to qualify as an incentive stock
option under the Federal tax laws, the Optionee
10.
<PAGE> 12
will recognize compensation income in connection with the acquisition of one or
more Optioned Shares hereunder, and the Optionee must make appropriate
arrangements for the satisfaction of all Federal, State or local income tax
withholding requirements and Federal social security employee tax requirements
applicable to such compensation income.
18. Additional Terms Applicable to a Non-Statutory Stock Option. In the
event this option is a non-statutory stock option as specified in the Grant
Notice, Optionee hereby agrees to make appropriate arrangements with the
Company or Parent or Subsidiary employing Optionee for the satisfaction of any
Federal, State or local income tax withholding requirements and Federal social
security employee tax requirements applicable to the exercise of this option.
11.
<PAGE> 13
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Giga-Tronics Incorporated (the "Company") that I elect to
purchase ______ shares of Common Stock of the Company (the "Purchased Shares")
pursuant to that certain option (the "Option") granted to me on ___________,
19__ to purchase up to ______ shares of the Company's Common Stock at an option
price of $_________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the Secretary of
the Company, I shall hereby pay to the Company the Option Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
- ----------------------------- --------------------------------------
Date Optionee
Address:
---------------------------------------
---------------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
---------------------------------------
Address to which certificate
is to be sent, if different
from address above:
---------------------------------------
---------------------------------------
---------------------------------------
Social Security Number: ---------------------------------------
Employee Number: ---------------------------------------
<PAGE> 1
GIGA-TRONICS INCORPORATED
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") made
to purchase shares of Giga-Tronics Incorporated (the "Company") common stock
(the "Common Stock") under the Company's Restated 1990 Stock Option Plan (the
"Plan"):
Optionee: ________________________________________
Grant Date: ______________________________________
Option Price: _________________________ per share
Number of Optioned Shares: _______________________
Expiration Date: _________________________________
Type of Option: __________________________________
Exercise Schedule: Provided Optionee remains in the Service of the
Company (as defined in the Stock Option Agreement), the Option will
become exercisable in an series of four (4) equal and successive
annual installments, beginning one year after the Grant Date.
The Option is granted pursuant to the provisions of the Plan, and the
terms and conditions of the Option are as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
GIGA-TRONICS INCORPORATED
By _______________________________
Title: ___________________________
__________________________________
Optionee
Address: __________________________________
__________________________________
DATED: ________________, 199_
<PAGE> 2
OFFICER
EXHIBIT A
GIGA-TRONICS INCORPORATED
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors of the Company (the "Board") has adopted
the Company's Restated 1990 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of key employees (including officers and
directors) who contribute to the financial success of the Company or its parent
or subsidiary corporations.
B. Optionee is an individual who is to render valuable services to
the Company or its parent or subsidiary corporations, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company's grant of a stock option to Optionee.
C. For purposes of this Agreement, the following definitions shall
be in effect:
Employee: Optionee shall be considered to be an Employee for so long
as such individual remains in the employ of the Company or one or more of
its Parent or Subsidiary corporations.
Fair Market Value: The Fair Market Value per share of Common Stock on
any relevant date under the Plan shall be the closing selling price per
share of Common Stock on such date, as quoted on the NASDAQ National Market
System (or any successor system). Should the Common Stock become traded on
a national securities exchange, then the Fair Market Value per share shall
be the closing selling price on such exchange on the date in question, as
such price is quoted on the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on the NASDAQ
National Market System (or national securities exchange) on the date in
question, then the Fair Market Value shall be the closing selling price on
the NASDAQ National Market System (or such securities exchange) on the last
preceding date for which such quotation exists.
<PAGE> 3
Parent: A corporation shall be deemed to be a Parent of the Company
if it is a corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each such corporation in
the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Section 16(b) Insider: Optionee shall be considered to be a Section
16(b) Insider on any relevant date under the Plan if such individual (A)
is at the time an officer or director of the Company subject to the
short-swing profit restrictions of Section 16(b) of the Securities
Exchange Act of 1934 or (B) was such an officer or director at any time
during the six-month period immediately preceding the date in question and
made any purchase or sale of Common Stock during such six-month period.
Service: Optionee shall be deemed to be in the Service of the
Company for so long as such individual (i) renders services on a periodic
basis to the Company or one or more of its Parent or Subsidiary
corporations as an Employee or (ii) serves as a non-employee member of the
Board.
Subsidiary: A corporation shall be deemed to be a Subsidiary of the
Company if it is a member of an unbroken chain of corporations beginning
with the Company provided each corporation in such chain (other than the
last corporation) owns, at the time of determination, stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. In the event this option is a
non-statutory option as specified in the Grant Notice, the term
"Subsidiary" shall also include any partnership, joint venture or other
business entity of which the Company owns, directly or indirectly through
another subsidiary corporation, more than a fifty percent (50%) interest
in voting power, capital or profits.
TERMS
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement, the Company hereby grants to Optionee, as of the
grant date (the "Grant Date") specified in the accompanying Notice of Grant of
Stock Option (the "Grant Notice"), a stock option to purchase up to that number
of shares of the Company's Common Stock (the "Optioned Shares") as is specified
in the Grant Notice. The Optioned Shares shall be purchasable from time to time
during the option term at the option price per share (the "Option Price")
specified in the Grant Notice.
2.
<PAGE> 4
2. Option Term. This option shall have a maximum term of five (5)
years measured from the Grant Date and shall accordingly expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5 or 7A of this
Agreement.
3. Transferability. This option shall not be transferable or
assignable by Optionee other than by will or by the laws of descent and
distribution. Accordingly, this option may be exercised, during Optionee's
lifetime, only by Optionee.
4. Exercisability. This option shall become exercisable for the
Optioned Shares in one or more installments as is specified in the Grant
Notice. As the option becomes exercisable in one or more installments, it shall
remain so exercisable until the Expiration Date or sooner termination of the
option term under Paragraph 5 or Paragraph 7A of this Agreement.
5. Termination of Service. In connection with the Optionee's
cessation of Service, the option term specified in Paragraph 2 shall terminate
(and this option shall cease to be exercisable) prior to the Expiration Date in
accordance with the following provisions:
(i) Except as otherwise provided in subparagraphs (ii) and
(iii) below, should the Optionee's Service with the Company terminate at
any time during the option term, then the period for exercising this
option shall be reduced to a twelve (12) month period commencing with
the date of such termination of Service, but in no event shall this
option be exercisable at any time after the Expiration Date. During such
limited period of exercisability, this option may not be exercised for
more than the number of Optioned Shares (if any) for which the option is
exercisable on the date of Optionee's termination of Service.(1) Upon
the expiration of such twelve (12) month period or (if earlier) upon the
Expiration Date, the option shall terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the
- ---------------
(1) In the event this option is an incentive stock option as specified in the
Grant Notice, the exercise of this option more than three (3) months after
the date of Optionee's cessation of Employee status for any reason (other
than death or permanent disability) will disqualify this option for
favorable tax treatment as further specified in Paragraph 17A.
3.
<PAGE> 5
Optionee's estate (or the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the laws
of descent and distribution) shall have the right to exercise this option
for any or all of the Optioned Shares for which this option is exercisable
on the date of the Optionee's cessation of Service. Such right shall lapse,
and this option shall cease to be exercisable, upon the earlier of (A) the
expiration of the twelve (12) month period measured from the date of
Optionee's cessation of Service or (B) the Expiration Date.
(iii) Should the Optionee's Service be terminated for any of the
following reasons, then this option shall terminate and cease to be
exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business
and operations of the Company or any Parent or Subsidiary corporation
employing Optionee;
(2) Optionee's unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the Company
or its Parent or Subsidiary corporations;
(3) Optionee's commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or
commission of a crime or other offense involving money or other
property of the Company or any Parent or Subsidiary corporation
employing Optionee.
The reasons for termination of Optionee's Service set forth in this
subparagraph (iii) are not intended to be, and are not inclusive of, all
acts or omissions which the Company may deem to constitute misconduct or
other grounds for terminating the Optionee's (or any other individual's)
Service.
6. Adjustment in Optioned Shares.
A. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, combination of
shares, exchange of shares, or other change affecting the outstanding Common
Stock as a class without receipt of consideration, the Plan Administrator shall
make appropriate adjustments to (a) the class and/or number of securities
subject to this option and (b) the Option Price payable per share in order to
4.
<PAGE> 6
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder. The adjustments so determined by the Plan Administrator shall be
final, binding and conclusive.
B. In the event that (i) the Company is the surviving entity in any
Corporate Transaction (within the meaning of Paragraph 7A) which does not result
in the termination of this option pursuant to the provisions of Paragraph 7 or
(ii) this option is to be assumed in connection with such Corporate Transaction,
then this option shall, immediately after such Corporate Transaction, be
appropriately adjusted to apply and pertain to the number and class of
securities which would be issuable, in consummation of such Corporate
Transaction, to an actual holder of the same number of shares of Common Stock as
are subject to this option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price payable per
share, provided the aggregate Option Price shall remain the same.
7. Corporate Transaction/Change in Control.
A. Upon the occurrence of one or more of the following (a "Corporate
Transaction"):
(i) 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,
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company to any entity other than a Parent or
Subsidiary of the Company, or,
(iii) 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,
the exercisability of this option shall, to the extent it is not otherwise at
the time fully exercisable, be automatically accelerated so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Optioned Shares and may be
exercised for all or any portion of such shares, whether or not this option is,
in connection with the Corporate Transaction, to be assumed by the successor
corporation or parent thereof.
B. This option, to the extent not previously exercised, shall terminate
upon the consummation of the Corporate Transaction.
5.
<PAGE> 7
and cease to be exercisable, unless it is expressly assumed by the successor
corporation or parent thereof.
C. Upon the occurrence of one or more of the following transactions (a
"Change in Control"):
(i) the acquisition by a person or group of relating persons, other
than the Company or any person controlling, controlled by or under common
control with the Company, of beneficial ownership (as determined pursuant
to the provisions of Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of securities of the Company representing thirty percent (30%)
or more of the combined voting power of the Company's then outstanding
securities pursuant to a transaction or series of related transactions
which the Board does not approve; or
(ii) the first date within any period of thirty-six (36) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (I)
have been members of the Board continuously since the beginning of such
period or (II) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (I) who were still in office at the time such election or nomination
was approved by the Board;
the exercisability of this option (if outstanding at the time) shall be
automatically accelerated so that such option shall become exercisable,
immediately prior to the consummation of the Change in Control, for all of the
Optioned Shares and may be exercised for all or any portion of such shares at
any time thereafter until the expiration or sooner termination of the option
term.
D. This Agreement shall not in any way affect the right of the Company to
adjust, reclassify, reorganize or otherwise make changes in its capital or
business structure or to merge,consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option, paid the Option Price for the
purchased shares and satisfied all other applicable conditions precedent to the
issuance of the certificates for such shares.
6.
<PAGE> 8
9. Manner of Exercising Option.
A. In order to exercise this option for one or more Optioned Shares
for which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee's death, the Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the Company a
written notice of exercise (the "Exercise Notice") in substantially
the form of Exhibit I attached hereto.
(ii) Pay the aggregate Option Price for the purchased shares in
one or more of the following alternative forms:
(1) full payment in cash or check made payable to the
Company's order; or
(2) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to
the Company's reported earnings and valued at Fair Market Value
on the Exercise Date (as such term is defined below); or
(3) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at Fair Market Value on
the Exercise Date and cash or check.
(iii) Furnish to the Company appropriate documentation that the
person or persons exercising the option, if other than Optionee, have
the right to exercise this option.
B. The Option Price may also be paid through a sale and remittance
procedure. Pursuant to such procedure, Optionee (I) shall provide irrevocable
written instructions to a designated brokerage firm to effect the immediate sale
of the purchased Optioned Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate Option Price payable for such purchased shares plus all applicable
Federal and State income and employment taxes required to be withheld by the
Company by reason of such purchase and (II) shall concurrently provide written
directives to the Company to deliver the certificates for the purchased Optioned
Shares directly to such brokerage firm in order to complete the sale
transaction.
7.
<PAGE> 9
C. For purposes of this Agreement, the Exercise Date shall be the first
date on which the Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure of Paragraph 9B is
utilized, payment of the Option Price shall immediately become due and shall
accompany the Exercise Notice.
D. As soon as practical after the Exercise Date, the Company shall mail
or deliver to Optionee (or to the other person or persons exercising this
option) a certificate or certificates representing the purchased shares.
E. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and the Optionee
with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3 or 7A, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
12. Liability of Company.
A. If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained.
B. The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Company of any liability with respect to the non-issuance or sale of the Common
Stock as to
8.
<PAGE> 10
which such approval shall not have been obtained. The Company, however, shall
use its best efforts to obtain all such approvals.
13. No Employment or Service Contract. Nothing in this Agreement or
in the Plan shall confer upon the Optionee any right to continue in the Service
of the Company (or any Parent or Subsidiary employing or retaining Optionee)
for any period of time or otherwise interfere with or restrict in any way the
rights of the Company (or any Parent or Subsidiary employing or retaining
Optionee) or the Optionee, which rights are hereby expressly reserved by each,
to terminate the Optionee's Service at any time for any reason whatsoever, with
or without cause.
14. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated below Optionee's
signature line on the Grant Notice. All notices shall be deemed to have been
given or delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by
and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
16. Governing Law. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
17. Additional Terms Applicable to an Incentive Stock Option. In
the event this option is an incentive stock option as specified in the Grant
Notice, the following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax
treatment as an incentive stock option under the Federal tax laws if (and to
the extent) this option is exercised for one or more Optioned Shares: (i) more
than three (3) months after the date the Optionee ceases Employee status for
any reason other than death or permanent disability or (ii) more than one (1)
year after the date the Optionee ceases Employee status by reason of permanent
disability.
9.
<PAGE> 11
For purposes of this Paragraph 17, Optionee shall be deemed to be
permanently disabled if Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or to be of continuous
duration of twelve (12) consecutive months or more, unable to perform his/her
usual duties for the Company or Subsidiary retaining his/her services.
B. Except in the event of a Corporate Transaction or Change in
Control under Paragraph 7, this option shall not become exercisable in any
calendar year during which it is outstanding if (and to the extent) the
aggregate fair market value (determined at the Grant Date) of the Common Stock
for which this option would otherwise first become exercisable in such calendar
year would, when added to the aggregate fair market value (determined as of the
respective date or dates of grant) of the Common Stock for which this option or
one or more other post-1986 incentive stock options granted to the Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Company or any Parent or Subsidiary corporations) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate. To the extent the exercisability of this option is deferred
by reason of the foregoing limitation, the deferred portion will first become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 17B would not
be contravened.
C. Should the exercisability of this option be accelerated upon a
Corporate Transaction or Change in Control in accordance with Paragraph 7, then
this option shall qualify for favorable tax treatment as an incentive stock
option under the Federal tax laws only to the extent the aggregate fair market
value (determined at the Grant Date) of the Common Stock for which this option
first becomes exercisable in the calendar year in which the Corporate
Transaction or Change in Control occurs does not, when added to the aggregate
fair market value (determined as of the respective date or dates of grant) of
the Common Stock for which this option or one or more other post-1986 incentive
stock options granted to the Optionee prior to the Grant Date (whether under
the Plan or any other option plan of the Company or any Parent or Subsidiary
corporations) first become exercisable during the same calendar year, exceed
One Hundred Thousand Dollars ($100,000) in the aggregate.
D. To the extent this option should fail to qualify as an incentive
stock option under the Federal tax laws, the Optionee will recognize
compensation income in connection with the acquisition of one or more Optioned
Shares hereunder, and the Optionee must make appropriate arrangements for the
satisfaction of
10.
<PAGE> 12
all Federal, State or local income tax withholding requirements and Federal
social security employee tax requirements applicable to such compensation
income.
18. Additional Terms Applicable to a Non-Statutory Stock Option. In the
event this option is a non-statutory stock option as specified in the Grant
Notice, Optionee hereby agrees to make appropriate arrangements with the Company
or Parent or Subsidiary employing Optionee for the satisfaction of any Federal,
State or local income tax withholding requirements and Federal social security
employee tax requirements applicable to the exercise of this option.
19. Tax Withholding.
A. Optionee may elect to have the Company withhold, from the shares of
Common Stock acquired under this option, one or more of such shares with an
aggregate Fair Market Value equal to the designated percentage (any multiple of
5% up to 100% as specified by the Optionee) of the Federal and State income
taxes incurred in connection with the acquisition of such shares.
B. In lieu of the direct withholding provisions of subparagraph A above,
Optionee is also hereby provided the election to deliver shares of Common Stock
to the Company in satisfaction of the entire Federal and State tax liability
incurred in connection with the exercise of this option.
C. Each election, whether under subparagraph A or B above, shall be
subject to the following terms and conditions:
(i) The election must be made on or before the date the amount of
the Federal and State income tax liability incurred in connection with the
acquisition of the shares is determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval of the Plan
Administrator, and no shares of Common Stock shall be accepted in
satisfaction of the applicable taxes except to the extent the election is
approved by the Plan Administrator.
(iv) The shares of Common Stock to be withheld pursuant to the
election shall be valued on the Tax Determination Date in accordance with
the Fair Market Value provisions of this Agreement.
(v) In no event may the Optionee's
11.
<PAGE> 13
requested withholding exceed the dollar amount of the Federal and State
income taxes incurred in connection with the acquisition of Common Stock
under this Option.
D. If Optionee is a Section 16(b) Insider at the time the election is to
be made, then the following limitations, in addition to the provisions of
subparagraph c above, shall also be applicable:
(i) The election may not be made within six (6) months after the
Grant Date of the option.
(ii) The election must be made six (6) months or more prior to the
Tax Determination Date for the acquired Common Stock, or both the option
and the election must be concurrently exercised during any quarterly
"window" period beginning on the third (3rd) business day following the
date of public release of the Company's quarterly or annual summary
statement of sales and earnings and ending on the twelfth (12th) business
day following such release date.
[20. Limited Stock Appreciation Right. Optionee is hereby granted a
limited stock appreciation right, exercisable upon the terms and conditions set
forth below:
A. Provided Optionee is at the time a Section 16(b) Insider, then in the
event there should occur a Change in Control (within the meaning of Paragraph
7C), Optionee shall have the right to surrender this option upon the following
terms and conditions:
(i) The stock appreciation right shall not become exercisable in
whole or in part until this option has been outstanding for at least a six
(6)-month period measured from the Grant Date.
(ii) Provided such six (6)-month requirement is satisfied, Optionee
shall have the right, exercisable for a period of thirty (30) days
following the Change in Control, to surrender this option (if outstanding
at the time) in exchange for a cash distribution from the Company equal in
amount to the excess of (a) the Change in Control price (at date of
surrender) of the number of Optioned Shares subject to the surrendered
option over (b) the aggregate option price payable for such shares.
(iii) For purposes of subparagraph (ii) above, the Change in Control
Price per share of the Optioned Shares subject to the surrendered option
shall be deemed to be equal to the greater of (a) the Fair
12.
<PAGE> 14
Market Value per share on the date of surrender or, if applicable, (b) the
highest reported price per share paid in effecting the Change in Control.
However, if the surrendered option is an incentive stock option as
specified in the Grant Notice, then the Change in Control Price shall not
exceed the value per share determined under clause (a) above.
(iv) The stock appreciation right may be exercised by the Optionee
upon written notice to the Company, accompanied by the return of this
Agreement and all other instruments evidencing the surrendered option,
prior to the expiration of the applicable thirty (30) day exercise period.
Such exercise period shall be shortened to the extent the option has not
been outstanding for at least six (6) months on the date such exercise
period would otherwise commence under subparagraph (ii) above.
(v) The appreciation distribution to which such individual shall
become entitled upon exercise of the stock appreciation right in accordance
herewith shall be made entirely in cash, and no approval of the Plan
Administrator shall be required in connection with the exercise of such
right or the payment of the appreciation distribution.
(vi) In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Change in Control
Price and the aggregate option price payable for such shares. This limited
stock appreciation right shall in all events terminate upon the expiration
or sooner termination of the option term and may not be assigned or
transferred by the Optionee.
B. Upon the exercise of the stock appreciation right, Optionee shall have
no further rights to acquire shares of Common Stock under the surrendered
option.]
13.
<PAGE> 15
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Giga-Tronics Incorporated (the "Company") that I elect to
purchase _______________ shares of Common Stock of the Company (the "Purchased
Shares") pursuant to that certain option (the "Option") granted to me on
_____________________ , 19___ to purchase up to ________________ shares of the
Company's Common Stock at an option price of $ _____________________ per share
(the "Option Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Company, I shall hereby pay to the Company the Option Price for
the Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
- --------------------------------------- ------------------------------------
Date Optionee
Address:
------------------------------------
------------------------------------
Print name in exact manner
it is to appear on the
stock certificate: ------------------------------------
Address to which certificate
is to be sent, if different
from address above: ------------------------------------
------------------------------------
------------------------------------
Social Security Number: ------------------------------------
Employee Number: ------------------------------------
<PAGE> 1
GIGA-TRONICS INCORPORATED
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the 22nd day of January, 1991, by and between
Giga-Tronics Incorporated, a California corporation (hereinafter called
"Company", and _________________ (hereinafter called "Optionee").
WITNESSETH:
RECITALS
A. The Board of Directors of the Company (the "Board") has adopted
the Company's Restated 1990 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of employees and non-employee members of
the Board who contribute to the financial success of the Company or its parent
or subsidiary corporations.
B. Optionee is a non-employee member of the Board who is to render
valuable services to the Company or its parent or subsidiary corporations. This
Agreement is executed pursuant to, and is intended to carry out the purposes
of, the Plan in connection with a special one-time stock option grant made to
such Optionee thereunder.
C. The granted option is not intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code.
D. For purposes of this Agreement, the following definitions shall
be in effect:
Fair Market Value: The Fair Market Value per share of Common Stock on
any relevant date under the Plan shall be the mean between the highest bid
and lowest asked prices (or, if such information is available, the closing
selling price) per share of Common Stock on such date in the over-the-
counter market, as such prices are reported by the National Association of
Securities Dealers through the NASDAQ system (or any successor system).
Should the Common Stock become traded on a national securities exchange,
then the Fair Market Value per share shall be the closing selling price on
such exchange on the date in question, as such price is quoted on the
composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on the over-the-counter market (or national
securities exchange) on the date in
<PAGE> 2
question, then the Fair Market Value shall be the mean between the highest
bid and lowest asked prices (or closing selling price) on the last
preceding date for which such quotations exist.
Parent: A corporation shall be deemed to be a Parent of the Company
if it is a corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each such corporation in
the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Subsidiary: A corporation shall be deemed to be a Subsidiary of the
Company if it is a member of an unbroken chain of corporation beginning
with the Company, provided each corporation in such chain (other than the
last corporation) owns, at the time of determination, stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. The term "Subsidiary" shall also
include any partnership, joint venture or other business entity of which
the Company owns, directly or indirectly through another subsidiary
corporation, more than a fifty percent (50%) interest in voting power,
capital or profits.
TERMS
- -----
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement, the Company hereby grants to Optionee, as of the
date of this Agreement (the "Grant Date"), a stock option to purchase up to
_____ shares of the Company's Common Stock (the "Optioned Shares"). The
Optioned Shares shall be purchasable from time to time during the option term
at the option price of $5.875 per share (the "Option Price"), the Fair Market
Value per share of the Common Stock on the Grant Date.
2. Option Term. This option shall have a maximum term of five (5)
years measured from the Grant Date and shall accordingly expire at the close of
business on January 21, 1996 (the "Expiration Date"), unless sooner terminated
in accordance with Paragraph 5 or 7A of this Agreement.
3. Transferability. This option shall not be transferable or
assignable by Optionee other than by will or by the laws of descent and
distribution. Accordingly, this option may be exercised, during Optionee's
lifetime, only by Optionee.
4. Exercisability. Subject to the shareholder-approval requirement
of Paragraph 18, this option shall become exercisable
2.
<PAGE> 3
for the Optioned Shares in a series of four (4) equal and successive annual
installments, beginning one (1) year after the Grant Date, provided the
Optionee continues to serve as a member of the Board. As the option becomes
exercisable for one or more installments, it shall remain so exercisable until
the Expiration Date or sooner termination of the option term under Paragraph 5
or Paragraph 7A of this Agreement.
5. Cessation of Board Membership. In connection with the Optionee's
cessation of Board membership, the option term specified in Paragraph 2 shall
terminate (and this option shall cease to be exercisable) prior to the
Expiration Date in accordance with the following provisions:
(i) Should Optionee cease to be a Board member for any reason
other than death while this option remains outstanding, then the period
for exercising this option shall be reduced to a six-month period
commencing with the date of such cessation of Board membership, but in no
event shall this option be exercisable at any time after the specified
Expiration Date. During such limited period of exercisability, this
option may not be exercised for more than the number of shares (if any)
for which it is exercisable on the date of Optionee's cessation of Board
membership. Upon the earlier of (A) the expiration of such six (6)-month
period of (B) the Expiration Date, the option shall terminate and cease to
be outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the Optionee's estate (or the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution) shall have the
right to exercise this option for any or all of the Optioned Shares for
which this option is exercisable on the date of the Optionee's cessation
of Board membership. Such right shall lapse, and this option shall cease
to be exercisable, upon the earlier of (A) the expiration of the twelve
(12) month period measured from the date of Optionee's death or (B) the
Expiration Date.
6. Adjustment in Optioned Shares. In the event any change is made
to the Common Stock issuable under the Plan by reason of any stock dividend,
stock split, combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without receipt of
consideration, the Plan Administrator shall make appropriate adjustments to (a)
the class and/or number of securities subject to this option and (b) the Option
Price payable per share in order to reflect such change and
3.
<PAGE> 4
thereby preclude a dilution or enlargement of benefits hereunder. The
adjustments so determined by the Plan Administrator shall be final, binding and
conclusive.
7. Corporate Transaction/Change in Control.
A. Upon the occurrence of one or more of the following transactions (a
"Corporate Transaction") for which the approval of the Company's shareholders
has been obtained:
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction of the principal purpose of
which is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company to any entity other than a Parent or
Subsidiary of the Company, or,
(iii) 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,
the exercisability of this option shall, to the extent it is not otherwise
at the time fully exercisable, be automatically accelerated so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Optioned Shares and may be
exercised for all or any portion of such shares.
B. This option, to the extent not previously exercised, shall terminate
upon the consummation of the Corporate Transaction and cease to be exercisable.
C. Upon the occurrence of one or more of the following transactions (a
"Change in Control"):
(i) the acquisition by a person or group of related persons, other
than the Company or any person controlling, controlled by or under common
control with the Company, of beneficial ownership (as determined pursuant
to the provisions of Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of securities of the Company representing thirty percent (30%)
or more of the combined voting power of the Company's then outstanding
securities pursuant to a transaction or series of related transactions
which the Board does not approve; or
4.
<PAGE> 5
(ii) the first date within any period of thirty-six (36) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (I)
have been members of the Board continuously since the beginning of such
period or (II) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (I) who were still in office at the time such election or nomination
was approved by the Board;
the exercisability of this option (if outstanding at the time) shall be
automatically accelerated so that such option shall become exercisable,
immediately prior to the consummation of the Change in Control, for all of the
Optioned Shares and may be exercised for all or any portion of such shares at
any time thereafter until the expiration or sooner termination of the option
term.
D. In no event shall this option be accelerated pursuant to the
provisions of this Paragraph 7 if the Corporate Transaction or Change in Control
is consummated prior to the satisfaction of the shareholder-approval
requirements of Paragraph 18.
E. This Agreement shall not in any way affect the right of the Company to
adjust, reclassify, reorganize or otherwise make changes in its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option, paid the Option Price for the
purchased shares and satisfied all other applicable conditions precedent to the
issuance of the certificates for such shares.
9. Manner of Exercising Option.
A. In order to exercise this option for one or more Optioned Shares for
which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee's death, the Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the Company a written
notice of exercise (the "Exercise Notice") in substantially the form of
Exhibit I attached hereto.
5.
<PAGE> 6
(ii) Pay the aggregate Option Price for the purchased shares
in one or more of the following alternative forms:
(1) full payment in cash or check made payable to the
Company's order; or
(2) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(3) full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to
the Company's reported earnings and valued at Fair Market Value on
the Exercise Date and cash or check.
(iii) Furnish to the Company appropriate documentation that
the person or persons exercising the option, if other than Optionee, have
the right to exercise this option.
B. To the extent permissible at the time pursuant to applicable
regulations of the Federal Reserve Board, the Option Price may also be paid
through a sale and remittance procedure. Pursuant to such procedure, Optionee
(I) shall provide irrevocable written instructions to a designated brokerage
firm to effect the immediate sale of the purchased Optioned Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Option Price payable for such purchased
shares plus all applicable Federal and State income and employment taxes
required to be withheld by the Company by reason of such purchase and (II)
shall concurrently provide written directives to the Company to deliver the
certificates for the purchased Optioned Shares directly to such brokerage firm
in order to complete the sale transaction.
C. For purposes of this Agreement, the Exercise Date shall be the
first date on which the Exercise Notice shall have been delivered to the
Company. Except to the extent the sale and remittance procedure of Paragraph 9B
is utilized, payment of the Option Price shall immediately become due and shall
accompany the Exercise Notice.
D. As soon as practical after the Exercise Date, the Company shall
mail or deliver to Optionee (or to the other person or persons exercising this
option) a certificate or certificates representing the purchased shares.
6.
<PAGE> 7
E. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and the Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall execute
and deliver to the Company such representations in writing as may be requested
by the Company in order for it to comply with the applicable requirements of
Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
12. Liability of Company. The inability of the Company to obtain approval
from any regulatory body having authority deemed by the Company to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Company of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Company, however, shall use its best efforts to obtain all such approvals.
13. No Impairment of Rights. Nothing in this Agreement or in the Plan
shall be deemed to impair or otherwise restrict the rights of the Company or
the shareholders to remove the Optionee from the Board at any time pursuant to
the provisions of applicable law.
14. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on this Agreement. All notices shall be deemed to have been given or delivered
upon personal delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are
7.
<PAGE> 8
in all respects limited by and subject to the express terms and provisions of
the Plan.
16. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
[17. Limited Stock Appreciation Right. Optionee is hereby granted a limited
stock appreciation right, exercisable upon the terms and conditions set forth
below:
A. In the event there should occur a Change in Control (within the
meaning of Paragraph 7C), Optionee shall have the right to surrender this option
upon the following terms and conditions:
(i) The stock appreciation right shall not become exercisable in
whole or in part until this option has been outstanding for at least a six
(6)-month period measured from the Grant Date.
(ii) Provided such six (6)-month requirement is satisfied, Optionee
shall have the right, exercisable for a period of thirty (30) days
following the Change in Control, to surrender this option (if outstanding
at the time) in exchange for a cash distribution from the Company equal in
amount to the excess of (a) the Change in Control Price (at date of
surrender) of the number of Optioned Shares subject to the surrendered
option over (b) the aggregate option price payable for such shares.
(iii) For purposes of subparagraph (ii) above, the Change in Control
Price per share of the Optioned Shares subject to the surrendered option
shall be deemed to be equal to the greater of (a) the Fair Market Value per
share on the date of surrender or, if applicable, (b) the highest reported
price per share paid in effecting the Change in Control.
(iv) The stock appreciation right may be exercised by the Optionee
upon written notice to the Company, accompanied by the return of this
Agreement and all other instruments evidencing the surrendered option,
prior to the expiration of the applicable thirty (30) day exercise period.
Such exercise period shall be shortened to the extent the option has not
been outstanding for at least six (6) months on the date such exercise
would otherwise commence under subparagraph (ii) above.
8.
<PAGE> 9
(v) The appreciation distribution to which such individual shall
become entitled upon exercise of the stock appreciation right in accordance
herewith shall be made entirely in cash, and no approval of the Plan
Administrator shall be required in connection with the exercise of such
right or the payment of the appreciation distribution.
(vi) In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Change in Control
Price and the aggregate option price payable for such shares. This limited
stock appreciation right shall in all events terminate upon the expiration
or sooner termination of the option term and may not be assigned or
transferred by the Optionee.
B. Upon the exercise of the stock appreciation right, Optionee shall
have no further rights to acquire shares of Common Stock under the surrendered
option.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in duplicate by its officer thereunto duly authorized, and the
Optionee has duly executed this Agreement in duplicate, all as of the day and
year first above written.
GIGA-TRONICS INCORPORATED
By
--------------------------------
Title:
---------------------------
----------------------------------
, Optionee
Address:
--------------------------
--------------------------
9.
<PAGE> 10
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Giga-Tronics Incorporated (the "Company") that I elect to
purchase _________ shares of Common Stock of the Company (the "Purchased
Shares") pursuant to that certain option (the "Option") granted to me on
_______________ to purchase up to ________ shares of the Company's Common Stock
at an option price of $_____ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the Secretary of
the Company, I shall hereby pay to the Company the Option price for the
Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
_____________________________________ ______________________________________
Date Optionee
Address: ______________________________________
______________________________________
Print name in exact manner
it is to appear on the
stock certificate: ______________________________________
Address to which certificate
is to be sent, if different
from address above: ______________________________________
______________________________________
______________________________________
Social Security Number: ______________________________________
<PAGE> 1
AUTOMATIC/NON-EMPLOYEE
DIRECTOR GRANT
GIGA-TRONICS INCORPORATED
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the ________ day of __________________, 19___, by and
between Giga-Tronics Incorporated, a California corporation (hereinafter called
"Company"), and ___________________________________ (hereinafter called
"Optionee").
WITNESSETH:
RECITALS
A. The Board of Directors of the Company (the "Board") has adopted
the Company's Restated 1990 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of employees and non-employee members of
the Board who contribute to the financial success of the Company or its parent
or subsidiary corporations.
B. Optionee is a non-employee member of the Board who is entitled to
receive an option to acquire shares of the Company's common stock (the "Common
Stock") pursuant to the automatic option grant program implemented for
non-employee Board members under the Plan. This Agreement is executed pursuant
to, and is intended to carry out the purposes of, the Plan in connection with
the automatic option grant made to such Optionee thereunder.
C. The granted option is not intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code.
D. For purposes of this Agreement, the following definitions shall
be in effect:
Fair Market Value: The Fair Market Value per share of Common Stock
on any relevant date under the Plan shall be the mean between the highest
bid and lowest asked prices (or, if such information is available, the
closing selling price) per share of Common Stock on such date in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers through the NASDAQ system (or any
successor system). Should the Common Stock become traded on a national
securities exchange, then the Fair Market Value per share shall be the
closing selling price on such exchange on the date in question, as such
price is quoted on the composite tape of transactions on such exchange. If
there
<PAGE> 2
is no reported sale of Common Stock on the over-the-counter market (or
national securities exchange) on the date in question, then the Fair
Market Value shall be the mean between the highest bid and lowest asked
prices (or closing selling price) on the last preceding date for which
such quotations exist.
Parent: A corporation shall be deemed to be a Parent of the Company
if it is a corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each such corporation in
the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Subsidiary: A corporation shall be deemed to be a Subsidiary of the
Company if it is a member of an unbroken chain of corporations beginning
with the Company, provided each corporation in such chain (other than the
last corporation) owns, at the time of determination, stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. The term "Subsidiary"
shall also include any partnership, joint venture or other business
entity of which the Company owns, directly or indirectly through another
subsidiary corporation, more than a fifty percent (50%) interest in
voting power, capital or profits.
TERMS
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement, the Company hereby grants to Optionee, as of the
date of this Agreement (the "Grant Date") a stock option to purchase up to
25,000 shares of the Company's Common Stock (the "Optioned Shares"). The
Optioned Shares shall be purchasable from time to time during the option term
at the option price of $_________ per share (the "Option Price"), the Fair
Market Value per share of the Common Stock on the Grant Date.
2. Option Term. This option shall have a maximum term of five (5)
years measured from the Grant Date and shall accordingly expire at the close of
business on __________________, 19___ (the "Expiration Date"), unless sooner
terminated in accordance with Paragraph 5 or 7A of this Agreement.
3. Transferability. This option shall not be transferable or
assignable by Optionee other than by will or by the laws of descent and
distribution. Accordingly, this option may be exercised, during Optionee's
lifetime, only by Optionee.
2.
<PAGE> 3
4. Exercisability. Subject to the shareholder-approval requirement
of Paragraph 18, this option shall become exercisable for the Optioned Shares
in a series of four (4) equal and successive annual installments, beginning one
(1) year after the Grant Date, provided the Optionee continues to serve as a
member of the Board. As the option becomes exercisable for one or more
installments, it shall remain so exercisable until the Expiration Date or
sooner termination of the option term under Paragraph 5 or Paragraph 7A of this
Agreement.
5. Cessation of Board Membership. In connection with the Optionee's
cessation of Board membership, the option term specified in Paragraph 2 shall
terminate (and this option shall cease to be exercisable) prior to the
Expiration Date in accordance with the following provisions:
(i) Should Optionee cease to be a Board member for any reason
other than death while this option remains outstanding, then the period
for exercising this option shall be reduced to a six-month period
commencing with the date of such cessation of Board membership, but in no
event shall this option be exercisable at any time after the specified
Expiration Date. during such limited period of exercisability, this option
may not be exercised for more than the number of shares (if any) for which
it is exercisable on the date of Optionee's cessation of Board membership.
Upon the earlier of (A) the expiration of such six (6)-month period or (B)
the Expiration Date, the option shall terminate and cease to be
outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the Optionee's estate (or the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution) shall have the
right to exercise this option for any or all of the Optioned Shares for
which this option is exercisable on the date of the Optionee's cessation
of Board membership. Such right shall lapse, and this option shall cease
to be exercisable, upon the earlier of (A) the expiration of the twelve
(12) month period measured from the date of Optionee's death or (B) the
Expiration Date.
6. Adjustment in Optioned Shares. In the event any change is made
to the Common Stock issuable under the Plan by reason of any stock dividend,
stock split, combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without receipt of
consideration, the Plan Administrator shall make appropriate adjustments to (a)
the class
3.
<PAGE> 4
and/or number of securities subject to this option and (b) the Option Price
payable per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder. The adjustments so determined by
the Plan Administrator shall be final, binding and conclusive.
7. Corporate Transaction/Change in Control.
A. Upon the occurrence of one or more of the following transactions
(a "Corporate Transaction") for which the approval of the Company's
shareholders has been obtained:
(i) 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,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company to any entity other
than a Parent or Subsidiary of the Company, or,
(iii) 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,
the exercisability of this option shall, to the extent it is not
otherwise at the time fully exercisable, be automatically accelerated so that
such option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all of the Optioned Shares
and may be exercised for all or any portion of such shares.
B. This option, to the extent not previously exercised, shall
terminate upon the consummation of the Corporate Transaction and cease to be
exercisable.
C. Upon the occurrence of one or more of the following transactions
(a "Change in Control"):
(i) the acquisition by a person or group of related
persons, other than the Company or any person controlling, controlled
by or under common control with the Company, of beneficial ownership
(as determined pursuant to the provisions of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of securities of the
Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities pursuant to
a
4.
<PAGE> 5
transaction or series of related transactions which the Board does not
approve; or
(ii) the first date within any period of thirty-six (36)
consecutive months or less on which there is effected any change in the
composition of the Board such that the majority of the Board (determined
by rounding up to the next whole number) ceases to be comprised of
individuals who either (I) have been members of the Board continuously
since the beginning of such period or (II) have been elected or nominated
for election as Board members during such period by at least a majority of
the Board members described in Clause (I) who were still in office at the
time such election or nomination was approved by the Board;
the exercisability of this option (if outstanding at the time) shall be
automatically accelerated so that such option shall become exercisable,
immediately prior to the consummation of the Change in Control, for all of the
Optioned Shares and may be exercised for all or any portion of such shares at
any time thereafter until the expiration or sooner termination of the option
term.
D. In no event shall this option be accelerated pursuant to the
provisions of this Paragraph 7 if the Corporate Transaction or Change in
Control is consummated prior to the satisfaction of the shareholder-approval
requirements of Paragraph 18.
E. This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this option shall
not have any of the rights of a shareholder with respect to the Optioned Shares
until such individual shall have exercised the option, paid the Option Price
for the purchased shares and satisfied all other applicable conditions
precedent to the issuance of the certificates for such shares.
9. Manner of Exercising Option.
A. In order to exercise this option for one or more Optioned Shares
for which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee's death, the Optionee's executor, administrator, heir
or legatee, as the case may be) must take the following actions:
5.
<PAGE> 6
(i) Execute and deliver to the Secretary of the Company a
written notice of exercise (the "Exercise Notice") in substantially the
form of Exhibit I attached hereto.
(ii) Pay the aggregate Option Price for the purchased shares in
one or more of the following alternative forms:
(1) full payment in cash or check made payable to the
Company's order; or
(2) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(3) full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to
the Company's reported earnings and valued at Fair Market Value on
the Exercise date and cash or check.
(iii) Furnish to the Company appropriate documentation that the
person or persons exercising the option, if other than Optionee, have the
right to exercise this option.
B. To the extent permissible at the time pursuant to applicable
regulations of the Federal Reserve Board, the Option Price may also be paid
through a sale and remittance procedure. Pursuant to such procedure, Optionee
(I) shall provide irrevocable written instructions to a designated brokerage
firm to effect the immediate sale of the purchased Optioned Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Option Price payable for such purchased
shares plus all applicable Federal and State income and employment taxes
required to be withheld by the Company by reason of such purchase and (II)
shall concurrently provide written directives to the Company to deliver the
certificates for the purchased Optioned shares directly to such brokerage firm
in order to complete the sale transaction.
C. For purposes of this Agreement, the Exercise Date shall be the
first date on which the Exercise Notice shall have been delivered to the
Company. Except to the extent the sale and remittance procedure of Paragraph 9B
is utilized, payment of the Option Price shall immediately become due and shall
accompany the Exercise Notice.
6.
<PAGE> 7
D. As soon as practical after the Exercise Date, the Company shall mail
or deliver to Optionee (or to the other person or persons exercising this
option) a certificate or certificates representing the purchased shares.
E. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and the Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall execute
and deliver to the Company such representations in writing as may be requested
by the Company in order for it to comply with the applicable requirements of
Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
12. Liability of Company. The inability of the Company to obtain approval
from any regulatory body having authority deemed by the Company to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Company of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Company, however, shall use its best efforts to obtain all such approvals.
13. No Impairment of Rights. Nothing in this Agreement or in the Plan
shall be deemed to impair or otherwise restrict the rights of the Company or the
shareholders to remove the Optionee from the Board at any time pursuant to the
provisions of applicable law.
14. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on this Agreement. All notices shall be deemed to have been given or delivered
upon personal delivery or upon deposit
7.
<PAGE> 8
in the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
15. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the automatic grant program for non-employee Board
members and are in all respects limited by and subject to the express terms and
provisions of the Plan applicable to such automatic grants.
16. Governing Law. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort of that State's conflict-of-laws rules.
[17. Limited Stock Appreciation Right. Optionee is hereby granted a
limited stock appreciation right, exercisable upon the terms and conditions set
forth below:
A. In the event there should occur a Change in Control (within the
meaning of Paragraph 7C), Optionee shall have the right to surrender this
option upon the following terms and conditions:
(i) The stock appreciation right shall not become exercisable
in whole or in part until this option has been outstanding for at least a
six (6)-month period measured from the Grant Date.
(ii) Provided such six (6)-month requirement is satisfied,
Optionee shall have the right, exercisable for a period of thirty (30)
days following the Change in Control, to surrender this option (if
outstanding at the time) in exchange for a cash distribution from the
Company equal in amount to the excess of (a) the Change in Control Price
(at date of surrender) of the number of Optioned Shares subject to the
surrendered option over (b) the aggregate option price payable for such
shares.
(iii) For purposes of subparagraph (ii) above, the Change in
Control Price per share of the Optioned Shares subject to the surrendered
option shall be deemed to be equal to the greater of (a) the Fair Market
Value per share on the date of surrender or, if applicable, (b) the
highest reported price per share paid in effecting the Change in Control.
(iv) The stock appreciation right may be exercised by the
Optionee upon written notice to the Company, accompanied by the return of
this Agreement and all other instruments evidencing the surrendered
option,
8.
<PAGE> 9
prior to the expiration of the applicable thirty (30) day exercise period.
Such exercise period shall be shortened to the extent the option has not
been outstanding for at least six (6) months on the date such exercise
would otherwise commence under subparagraph (ii) above.
(v) The appreciation distribution to which such individual shall
become entitled upon exercise of the stock appreciation right in
accordance herewith shall be made entirely in cash, and no approval of the
Plan Administrator shall be required in connection with the exercise of
such right or the payment of the appreciation distribution.
(vi) In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Change in
Control Price and the aggregate option price payable for such shares. This
limited stock appreciation right shall in all events terminate upon the
expiration or sooner termination of the option term and may not be
assigned or transferred by the Optionee.
B. Upon the exercise of the stock appreciation right, Optionee shall
have no further rights to acquire shares of Common Stock under the surrendered
option.]
9.
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in duplicate by its officer thereunto duly authorized, and the
Optionee has duly executed this Agreement in duplicate, all as of the day and
year first above written.
GIGA-TRONICS INCORPORATED
By
-----------------------------------
Title:
-------------------------------
-------------------------------------
Optionee
Address:
-------------------------------------
-------------------------------------
1.
<PAGE> 11
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Giga-Tronics Incorporated (the "Company") that I elect
to purchase _________ shares of Common Stock of the Company (the "Purchased
Shares") pursuant to that certain option (the "Option") granted to me on
_________________, 19___ to purchase up to 25,000 shares of the Company's
Common Stock at an option price of $___________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the Secretary
of the Company, I shall hereby pay to the Company the Option Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
- --------------------------------- ---------------------------------
Date Optionee
Address: ---------------------------------
---------------------------------
Print name in exact manner
it is to appear on the
stock certificate: ---------------------------------
Address to which certificate
is to be sent, if different
from address above: ---------------------------------
---------------------------------
---------------------------------
Social Security Number: ---------------------------------
