EXHIBIT 99.1
FORM OF INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this ____ day of
____________, ____ (the "Date of Grant"), by and between MOCON, Inc. (the
"Company") and __________________ (the "Optionee").
A. The Company has adopted the MOCON, Inc. 1998 Stock Option Plan (the
"Plan") authorizing the Board of Directors of the Company, or a committee as
provided for in the Plan (the Board or such a committee to be referred to as the
"Committee"), to grant incentive stock options to employees of the Company and
its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee the right, privilege, and
option (the "Option") to purchase ___________________ (_______) shares (the
"Option Shares") of the Company's common stock, $0.10 par value (the "Common
Stock"), according to the terms and subject to the conditions hereinafter set
forth and as set forth in the Plan. Subject to Section 10 of this Agreement, the
Option is intended to be an "incentive stock option," as that term is used in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Option Exercise Price.
The per share price to be paid by Optionee in the event of an exercise
of the Option will be $___.
3. Duration of Option and Time of Exercise.
3.1 Initial Period of Exercisability. The Option will become
exercisable immediately with respect to the Option Shares. The following table
sets forth the date of exercisability and the number of Option Shares available:
Exercisability Available for Exercise
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In no event will this Option be exercisable after, and this Option will
become void and expire as to all unexercised Option Shares at 5:00 p.m.
Minneapolis, Minnesota time on _____________, ____ (the "Time of
Termination").
3.2 Termination of Employment.
(a) Termination Due to Death, Disability or Retirement. In the
event the Optionee's employment with the Company and all Subsidiaries
is terminated by reason of death, Disability
or Retirement, this Option will remain exercisable, to the extent
exercisable as of the date of such termination, for a period of one
year after such termination (but in no event after the Time of
Termination).
(b) Termination for Reasons Other Than Death, Disability or
Retirement. In the event that the Optionee's employment with the
Company and all Subsidiaries is terminated for any reason other than
death, Disability or Retirement, or the Optionee is in the employ of a
Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company
(unless the Optionee continues in the employ of the Company or another
Subsidiary), all rights of the Optionee under the Plan and this
Agreement will immediately terminate without notice of any kind, and
this Option will no longer be exercisable; provided, however, that if
such termination is due to any reason other than termination by the
Company or any Subsidiary for "cause" (as defined in the Plan), this
Option will remain exercisable to the extent exercisable as of such
termination for a period of three months after such termination (but in
no event after the Time of Termination).
3.3 Change in Control.
(a) Impact of Change in Control. If a Change in Control (as
defined in the Plan) of the Company occurs, this Option will become
immediately exercisable in full and will remain exercisable until the
Time of Termination, regardless of whether the Optionee remains in the
employ of the Company or any Subsidiary. In addition, if a Change in
Control of the Company occurs, the Committee, in its sole discretion
and without the consent of the Optionee, may determine that the
Optionee will receive, with respect to some or all of the Option
Shares, as of the effective date of any such Change in Control of the
Company, cash in an amount equal to the excess of the Fair Market Value
(as defined in the Plan) of such Option Shares immediately prior to the
effective date of such Change in Control of the Company over the option
exercise price per share of this Option.
(b) Limitation on Change in Control Payments. Notwithstanding
anything in this Section 3.3 to the contrary, if, with respect to the
Optionee, acceleration of the vesting of this Option or the payment of
cash in exchange for all or part of the Option Shares as provided above
(which acceleration or payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together with any other
payments which the Optionee has the right to receive from the Company
or any corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to Section
1504(b) of the Code) of which the Company is a member, would constitute
a "parachute payment" (as defined in Section 280G(b)(2) of the Code),
the payments to the Optionee as set forth herein will be reduced to the
largest amount as will result in no portion of such payments being
subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that if the Optionee is subject to a separate
agreement with the Company or a Subsidiary that expressly addresses the
potential application of Sections 280G or 4999 of the Code (including,
without limitation, that "payments" under such agreement or otherwise
will be reduced, that the Optionee will have the discretion to
determine which "payments" will be reduced, that such "payments" will
not be reduced or that such "payments" will be "grossed up" for tax
purposes), then this Section 3.3(b) will not apply, and any "payments"
to the Optionee pursuant to Section 3.3(a) of this Agreement will be
treated as "payments" arising under such separate agreement.
4. Manner of Option Exercise.
4.1 Notice. This Option may be exercised by the Optionee in whole or in
part from time to time, subject to the conditions contained in the Plan and in
this Agreement, by delivery, in person, by
facsimile or electronic transmission or through the mail, to the Company at its
principal executive office in Minneapolis, Minnesota (Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇), of a written notice of exercise. Such notice must be in a form
satisfactory to the Committee, must identify the Option, must specify the number
of Option Shares with respect to which the Option is being exercised, and must
be signed by the person or persons so exercising the Option. Such notice must be
accompanied by payment in full of the total purchase price of the Option Shares
purchased. In the event that the Option is being exercised, as provided by the
Plan and Section 3.2 above, by any person or persons other than the Optionee,
the notice must be accompanied by appropriate proof of right of such person or
persons to exercise the Option. As soon as practicable after the effective
exercise of the Option, the Optionee will be recorded on the stock transfer
books of the Company as the owner of the Option Shares purchased, and the
Company will deliver to the Optionee one or more duly issued stock certificates
evidencing such ownership.
4.2 Payment. At the time of exercise of this Option, the Optionee must
pay the total purchase price of the Option Shares to be purchased entirely in
cash (including a check, bank draft or money order, payable to the order of the
Company); provided, however, that the Committee, in its sole discretion, may
allow such payment to be made, in whole or in part, by tender of a promissory
note (on terms acceptable to the Committee in its sole discretion) or a Broker
Exercise Notice or Previously Acquired Shares (as such terms are defined in the
Plan), or by a combination of such methods. In the event the Optionee is
permitted to pay the total purchase price of this Option in whole or in part
with Previously Acquired Shares, the value of such shares will be equal to their
Fair Market Value on the date of exercise of this Option.
5. Rights of Optionee; Transferability.
5.1 Employment. Nothing in this Agreement will interfere with or limit
in any way the right of the Company or any Subsidiary to terminate the
employment of the Optionee at any time, nor confer upon the Optionee any right
to continue in the employ of the Company or any Subsidiary at any particular
position or rate of pay or for any particular period of time.
5.2 Rights as a Shareholder. The Optionee will have no rights as a
shareholder unless and until all conditions to the effective exercise of this
Option (including, without limitation, the conditions set forth in Sections 4
and 6 of this Agreement) have been satisfied and the Optionee has become the
holder of record of such shares. No adjustment will be made for dividends or
distributions with respect to this Option as to which there is a record date
preceding the date the Optionee becomes the holder of record of such shares,
except as may otherwise be provided in the Plan or determined by the Committee
in its sole discretion.
5.3 Restrictions on Transfer. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of the Optionee in this Option prior to exercise may
be assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. The Optionee will, however, be entitled to
designate a beneficiary to receive this Option upon such Optionee's death, and,
in the event of the Optionee's death, exercise of this Option (to the extent
permitted pursuant to Section 3.2(a) of this Agreement) may be made by the
Optionee's legal representatives, heirs and legatees.
5.4 Breach of Confidentiality or Non-Compete Agreements.
Notwithstanding anything in this Agreement or the Plan to the contrary, in the
event that the Optionee materially breaches the terms of any confidentiality or
non-compete agreement entered into with the Company or any
Subsidiary, whether such breach occurs before or after termination of the
Optionee's employment with the Company or any Subsidiary, the Committee in its
sole discretion may immediately terminate all rights of the Optionee under the
Plan and this Agreement without notice of any kind.
6. Withholding Taxes.
The Company is entitled to (a) withhold and deduct from future wages of
the Optionee (or from other amounts that may be due and owing to the Optionee
from the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the Option, including,
without limitation, the grant or exercise of this Option or a disqualifying
disposition of any Option Shares, or (b) require the Optionee promptly to remit
the amount of such withholding to the Company before acting on the Optionee's
notice of exercise of this Option. In the event that the Company is unable to
withhold such amounts, for whatever reason, the Optionee agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required to
withhold under federal, state or local law.
7. Adjustments.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number and kind of securities or other property (including
cash) subject to, and the exercise price of, this Option.
8. Subject to Plan.
The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan. The terms of the Plan are incorporated by reference in this Agreement
in their entirety, and the Optionee, by execution of this Agreement,
acknowledges having received a copy of the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan. In
the event that any provision of this Agreement is inconsistent with the terms of
the Plan, the terms of the Plan will prevail.
9. Incentive Stock Option Limitations.
9.1 Limitation on Amount. To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of the shares of Common Stock with
respect to which incentive stock options (within the meaning of Section 422 of
the Code) are exercisable for the first time by the Optionee during any calendar
year (under the Plan and any other incentive stock option plans of the Company
or any subsidiary or parent corporation of the Company (within the meaning of
the Code)) exceeds $100,000 (or such other amount as may be prescribed by the
Code from time to time), such excess incentive stock options will be treated as
non-statutory stock options in the manner set forth in the Plan.
9.2 Limitation on Exercisability; Disposition of Option Shares. Any
incentive stock option that remains unexercised more than one year following
termination of employment by reason of death or disability or more than three
months following termination for any reason other than death or Disability will
thereafter be deemed to be a non-statutory stock option. In addition, in the
event that a disposition (as defined in Section 424(c) of the Code) of shares of
Common Stock acquired pursuant to the exercise
of an incentive stock option occurs prior to the expiration of two years after
its date of grant or the expiration of one year after its date of exercise (a
"disqualifying disposition"), such incentive stock option will, to the extent of
such disqualifying disposition, be treated in a manner similar to a
non-statutory stock option.
9.3 No Representation or Warranty. Section 422 of the Code and the
rules and regulations thereunder are complex, and neither the Plan nor this
Agreement purports to summarize or otherwise set forth all of the conditions
that need to be satisfied in order for this Option to qualify as an incentive
stock option. In addition, this Option may contain terms and conditions that
allow for exercise of this Option beyond the periods permitted by Section 422 of
the Code, including, without limitation, the periods described in Section 9.2 of
this Agreement. Accordingly, the Company makes no representation or warranty
regarding whether the exercise of this Option will qualify as the exercise of an
incentive stock option, and the Company recommends that the Optionee consult
with the Optionee's own advisors before making any determination regarding the
exercise of this Option or the sale of the Option Shares.
10. Miscellaneous.
10.1 Binding Effect. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.
10.2 Governing Law. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with the Plan and governed by the
laws of the State of Minnesota, without regard to conflicts of laws provisions.
Any legal proceeding related to this Agreement will be brought in an appropriate
Minnesota court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
10.3 Entire Agreement. This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the
grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings relating
to the grant and exercise of this Option and the administration of the Plan.
10.4 Amendment and Waiver. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties to this Agreement or, in the case of a
waiver, by the party waiving compliance.
The parties to this Agreement have executed this Agreement effective
the day and year first above written.
MOCON, INC.
By
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Its
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By execution of this Agreement, OPTIONEE
the Optionee acknowledges having
received a copy of the Plan.
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(Signature)
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(Name and Address)
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