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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__
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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
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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.
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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
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(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.
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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
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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
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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
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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
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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.
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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
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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
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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.
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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.
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Date Optionee
Address:
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Print name in exact manner
it is to appear on the
stock certificate:
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Address to which certificate
is to be sent, if different
from address above:
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Social Security Number: ---------------------------------------
Employee Number: ---------------------------------------