EXHIBIT 10.2
INCENTIVE STOCK OPTION AGREEMENT
WINLAND ELECTRONICS, INC.
2008 EQUITY INCENTIVE PLAN
THIS AGREEMENT, made
effective as of this 6th day of May, 2008, by and between
Winland Electronics, Inc., a Minnesota corporation (the
“Company”), and Thomas J. de Petra
(“Participant”).
W
I T N E S S E T H:
WHEREAS, Participant on the
date hereof is a key employee or officer of the Company or
one of its Subsidiaries; and
WHEREAS, the Company wishes
to grant an incentive stock option to Participant to purchase
shares of the Company’s Common Stock pursuant to the
Company’s 2008 Equity Incentive Plan (the
“Plan”); and
WHEREAS, the Administrator
of the Plan has authorized the grant of an incentive stock
option to Participant and has determined that, as of the
effective date of this Agreement, the fair market value of
the Company’s Common Stock is $1.74 per
share;
NOW, THEREFORE, in
consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as
follows:
1.
Grant
of Option . The Company hereby grants to
Participant on the date set forth above (the “Date of
Grant”) the right and option (the “Option”)
to purchase all or any portion of an aggregate of fifty
thousand (50,000) shares of Common Stock at a per share price
of $1.74 on the terms and conditions set forth herein and
subject to adjustment pursuant to Section 15 of the
Plan. This Option is intended to be an incentive
stock option within the meaning of Section 422, or any
successor provision, of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations
thereunder, to the extent permitted under Code Section
422(d).
2.
Duration
and Exercisability .
a.
General
. The term during which this Option may be
exercised shall terminate on May 6, 2014, except as
otherwise provided in Paragraphs 2(b) through 2(d)
below. This Option shall become exercisable
according to the following schedule:
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Vesting Date
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Number of Shares
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May
6, 2009
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10,000
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May
6, 2010
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10,000
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May
6, 2011
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10,000
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May
6, 2012
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10,000
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May
6, 2013
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10,000
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Once
the Option becomes exercisable to the extent of one hundred
percent (100%) of the aggregate number of shares specified in
Paragraph 1, Participant may continue to exercise this Option
under the terms and conditions of this Agreement until the
termination of the Option as provided herein. If
Participant does not purchase upon an exercise of this Option
the full number of shares which Participant is then entitled
to purchase, Participant may purchase upon any subsequent
exercise prior to this Option’s termination such
previously unpurchased shares in addition to those Participant
is otherwise entitled to purchase.
b.
Termination
of Employment (other than Disability or Death)
. If Participant’s employment with the
Company or any Subsidiary is terminated for any reason other
than disability or death, this Option shall completely
terminate on the earlier of (i) the close of business on the
three-month anniversary date of such termination of
employment, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above. In such period
following the termination of Participant’s employment,
this Option shall be exercisable only to the extent the
Option was exercisable on the vesting date immediately
preceding such termination of employment, but had not
previously been exercised. To the extent this
Option was not exercisable upon such termination of
employment, or if Participant does not exercise the Option
within the time specified in this Paragraph 2(b), all rights
of Participant under this Option shall be
forfeited.
c.
Disability
. If Participant’s employment terminates
because of disability (as defined in Code Section 22(e), or
any successor provision), this Option shall terminate on the
earlier of (i) the close of business on the twelve-month
anniversary date of such termination of employment, and (ii)
the expiration date of this Option stated in Paragraph 2(a)
above. In such period following the termination of
Participant’s employment, this Option shall be
exercisable only to the extent the Option was exercisable on
the vesting date immediately preceding such termination of
employment, but had not previously been
exercised. To the extent this Option was not
exercisable upon such termination of employment, or if
Participant does not exercise the Option within the time
specified in this Paragraph 2(c), all rights of Participant
under this Option shall be forfeited.
d.
Death
. In the event of Participant’s death, this
Option shall terminate on the earlier of (i) the close of
business on the twelve-month anniversary date of the date of
Participant’s death, and (ii) the expiration date of
this Option stated in Paragraph 2(a) above. In
such period following Participant’s death, this Option
shall be exercisable by the person or persons to whom
Participant’s rights under this Option shall have
passed by Participant’s will or by the laws of descent
and distribution only to the extent the Option was
exercisable on the vesting date immediately preceding the
date of Participant’s death, but had not previously
been exercised. To the extent this Option was not
exercisable upon the date of Participant’s death, or if
such person or persons do not exercise this Option within the
time specified in this Paragraph 2(d), all rights under this
Option shall be forfeited.
3.
Manner
of Exercise .
a.
General
. The Option may be exercised only by Participant
(or other proper party in the event of death or incapacity),
subject to the conditions of the Plan and subject to such
other administrative rules as the Administrator may deem
advisable, by delivering within the Option Period written
notice of exercise to the Company at its principal
office. The notice shall state the number of
shares as to which the Option is being exercised and shall be
accompanied by payment in full of the Option price for all
shares designated in the notice. The exercise of
the Option shall be deemed effective upon receipt of such
notice by the Company and upon payment that complies with the
terms of the Plan and this Agreement. The Option
may be exercised with respect to any number or all of the
shares as to which it can then be exercised and, if partially
exercised, may be so exercised as to the unexercised shares
any number of times during the Option period as provided
herein.
b.
Form
of Payment . Payment of the option price by
Participant shall be in the form of cash, personal check,
certified check or, if not prohibited
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