exv10w2






Exhibit 10.2




FALLBROOK TECHNOLOGIES INC.




2004 STOCK PLAN



NOTICE OF STOCK OPTION GRANT


To: «Name»




     You have been granted an option to purchase Common Stock of Fallbrook Technologies Inc. (the
“Company”) as follows:



	 	 	 
	Board Approval Date:

	 	
	 
	 	 
	Date of Grant:

	 	
	 
	 	 
	Exercise Price per Share:

	 	
	 
	 	 
	Total Number of Shares Granted:

	 	
	 
	 	 
	Total Exercise Price:

	 	
	 
	 	 
	Type of Option:

	 	
	 
	 	 
	Expiration Date:

	 	
	 
	 	 
	Vesting Commencement Date:

	 	
	 
	 	 
	Vesting Schedule

	 	So long as your employment or consulting relationship with the Company
continues, the Shares underlying this Option shall vest and become exercisable in
accordance with the following schedule: one third (1/3) of the total number of Shares
subject to the Option shall vest and become exercisable on the twelve (12) month
anniversary of the Vesting Commencement Date and one twenty-fourth (1/24) of the
remaining Shares subject to the Option shall vest and become exercisable on the same
day of each month thereafter.






 









 






	 	 	 
	Termination Period:

	 	This Option may be exercised for 90 days after termination of employment
or consulting relationship except as set out in Section 5 of the Stock Option Agreement
(but in no event later than the Expiration Date). Optionee is responsible for keeping
track of these exercise periods following termination for any reason of his or her
service relationship with the Company. The Company will not provide further notice of
such periods.
	 
	 	 
	Transferability:

	 	This Option may not be transferred.






     By your signature and the signature of the Company’s representative below, you and the Company
agree that this option is granted under and governed by the terms and conditions of the Fallbrook
Technologies Inc. 2004 Stock Plan and the Stock Option Agreement, both of which are attached and
made a part of this document.



     In addition, you agree and acknowledge that your rights to any Shares underlying the Option
will be earned only as you provide services to the Company over time, that the grant of the Option
is not as consideration for services you rendered to the Company prior to your Vesting Commencement
Date, and that nothing in this Notice or the attached documents confers upon you any right to
continue your employment or consulting relationship with the Company for any period of time, nor
does it interfere in any way with your right or the Company’s right to terminate that relationship
at any time, for any reason, with or without cause.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Fallbrook Technologies Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 


	 	 	 	 	 	 

	 	 
	Signature
	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	William G. Klehm	 	 
	 
	 	 	 	 	 	 	 	 
	«Name»

	 	 	 	Title:
	 	President & CEO	 	 







-2-









 








FALLBROOK TECHNOLOGIES INC.




2004 STOCK PLAN



STOCK OPTION AGREEMENT



     1. Grant of Option. Fallbrook Technologies Inc., a Delaware corporation (the
“Company”), hereby grants to (“Optionee”), an option (the “Option”) to
purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice
of Stock Option Grant (the “Notice”), at the exercise price per Share set forth in the
Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the
Fallbrook Technologies Inc. 2004 Stock Plan (the “Plan”) adopted by the Company, which is
incorporated in this Agreement by reference. Unless otherwise defined in this Agreement, the terms
used in this Agreement shall have the meanings defined in the Plan.



     2. Designation of Option. This Option is intended to be an Incentive Stock Option as
defined in Section 422 of the Code only to the extent so designated in the Notice, and to the
extent it is not so designated or to the extent the Option does not qualify as an Incentive Stock
Option, it is intended to be a Nonstatutory Stock Option.



     Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the
Shares subject to this Option (and all other Incentive Stock Options granted to Optionee by the
Company or any Parent or Subsidiary, including under other plans of the Company) that first become
exercisable in any calendar year have an aggregate fair market value (determined for each Share as
of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess
of $100,000 shall be treated as subject to a Nonstatutory Stock Option, in accordance with Section
5(c) of the Plan.



     3. Exercise of Option. This Option shall be exercisable during its term in accordance
with the Vesting/Exercise Schedule set out in the Notice and with the provisions of Section 10 of
the Plan as follows:



          (a) Right to Exercise.



               (i) This Option may not be exercised for a fraction of a share.



               (ii) In the event of Optionee’s death, disability or other termination of employment, the
exercisability of the Option is governed by Section 5 below, subject to the limitations contained
in this Section 3.



               (iii) In no event may this Option be exercised after the Expiration Date of the Option as set
forth in the Notice.



 









 





          (b) Method of Exercise.



               (i) This Option shall be exercisable by execution and delivery of the Exercise Notice and
Restricted Stock Purchase Agreement attached hereto as Exhibit A (the “Exercise
Agreement”) or of any other form of written notice approved for such purpose by the Company
which shall state Optionee’s election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and agreements as to the
holder’s investment intent with respect to such Shares as may be required by the Company pursuant
to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be
delivered to the Company by such means as are determined by the Plan Administrator in its
discretion to constitute adequate delivery. The written notice shall be accompanied by payment of
the Exercise Price. This Option shall be deemed to be exercised upon receipt by the Company of
such written notice accompanied by the Exercise Price.



               (ii) As a condition to the exercise of this Option and as further set forth in Section 12 of
the Plan, Optionee agrees to make adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon the vesting or exercise of the Option, or disposition of
Shares, whether by withholding, direct payment to the Company, or otherwise.



               (iii) The Company is not obligated, and will have no liability for failure, to issue or
deliver any Shares upon exercise of the Option unless such issuance or delivery would comply with
the Applicable Laws, with such compliance determined by the Company in consultation with its legal
counsel. This Option may not be exercised until such time as the Plan has been approved by the
stockholders of the Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any applicable federal or
state securities or other law or regulation, including any rule under Part 221 of Title 12 of the
Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the
exercise of this Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by the Applicable Laws. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to Optionee on the date on which the Option is
exercised with respect to such Shares.



     4. Method of Payment. Payment of the Exercise Price shall be by any of the following,
or a combination of the following, at the election of Optionee:



          (a) cash or check;



          (b) cancellation of indebtedness;



          (c) prior to the date, if any, upon which the Common Stock becomes a Listed Security, by
surrender of other shares of Common Stock of the Company that have an aggregate Fair Market Value
on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being
exercised. In the case of shares acquired directly or indirectly from the Company, such shares
must have been owned by Optionee for more than six (6) months on the
date of surrender (or such other period of time as is necessary to avoid the Company’s
incurring adverse accounting charges); or



 









 





          (d) following the date, if any, upon which the Common Stock is a Listed Security, and if the
Company is at such time permitting “same day sale” cashless brokered exercises, delivery of a
properly executed exercise notice together with irrevocable instructions to a broker participating
in such cashless brokered exercise program to deliver promptly to the Company the amount required
to pay the exercise price (and applicable withholding taxes).



     5. Termination of Relationship. Following the date of termination of Optionee’s
Continuous Service Status for any reason (the “Termination Date”), Optionee may exercise
the Option only as set forth in the Notice and this Section 5. To the extent that Optionee is not
entitled to exercise this Option as of the Termination Date, or if Optionee does not exercise this
Option within the Termination Period set forth in the Notice or the termination periods set forth
below, the Option shall terminate in its entirety. In no event, may any Option be exercised after
the Expiration Date of the Option as set forth in the Notice.



          (a) Termination. In the event of termination of Optionee’s Continuous Service Status
other than as a result of Optionee’s disability or death or for Cause (as defined in the Plan),
Optionee may, to the extent Optionee is vested in the Option Shares at the date of such termination
(the “Termination Date”), exercise this Option during the Termination Period set forth in
the Notice.



          (b) Other Terminations. In connection with any termination other than a termination
covered by Section 5(a), Optionee may exercise the Option only as described below:



               (i) Termination upon Disability of Optionee. In the event of termination of
Optionee’s Continuous Service Status as a result of Optionee’s disability, Optionee may, but only
within twelve months from the Termination Date, exercise this Option to the extent Optionee was
vested in the Option Shares as of such Termination Date.



               (ii) Death of Optionee. In the event of the death of Optionee (a) during the term of
this Option and while an Employee or Consultant of the Company and having been in Continuous
Service Status since the date of grant of the Option, or (b) within thirty (30) days after
Optionee’s Termination Date, the Option may be exercised at any time within twelve months following
the date of death by Optionee’s estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent Optionee was vested in the Option as of the
Termination Date.



               (iii) Termination for Cause. In the event Optionee’s Continuous Service Status is
terminated for Cause, the Option shall terminate immediately upon such termination for Cause as set
forth in Section 10(b)(iv) of the Plan. In the event Optionee’s employment or consulting
relationship with the Company is suspended pending investigation of whether such relationship shall
be terminated for Cause, all Optionee’s rights under the Option, including the right to exercise
the Option, shall be suspended during the investigation period, also as set forth in Section
10(b)(iv) of the Plan.



     6. Change of Control.



 









 





          (a) In the event of a Change of Control and if the Optionee remains in Continuous Service
Status with the successor corporation or a parent or subsidiary of such Successor Corporation (the
“Successor Corporation”), then this Option shall be assumed or an equivalent option or
right shall be substituted by the Successor Corporation[, unless the Successor Corporation does not
agree to assume this Option or to substitute an equivalent option or right, in which case this
Option shall terminate upon the consummation of the transaction.] [Garth—The Compensation
Committee Resolutions didn’t say what happens if the Option is not assumed. The bracketed
provision is copied from the Stock Plan.]



          (b) In the event of a Change of Control and (i) if the Optionee does not remain in Continuous
Service Status with the Successor Corporation or (ii) this Option is assumed or substituted by the
Successor Corporation in the Change of Control and the Optionee is subject to an Involuntary
Termination by the Successor Corporation at the time of, or at any time following the consummation
of the Change of Control transaction, then any assumed or substituted Option held by the terminated
Optionee at the time of termination shall accelerate and become exercisable as to the number of
Shares then unvested. The acceleration of vesting provided for in the previous sentence shall
occur immediately prior to the effective date of termination of the Participant’s Continuous
Service Status.



     7. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.



     8. Tax Consequences. Below is a brief summary as of the date of this Option of
certain of the federal tax consequences of exercise of this Option and disposition of the Shares
under the laws in effect as of the Date of Grant. THIS SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES.



          (a) Incentive Stock Option.



               (i) Tax Treatment upon Exercise and Sale of Shares. If this Option qualifies as an
Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of
the Option, although the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject Optionee to the alternative minimum tax in the year of
exercise. If Shares issued upon exercise of an Incentive Stock Option are held for at least one
year after exercise and are disposed of at least two years after the Option grant date, any gain
realized on disposition of the Shares will also be treated as long-term capital gain for federal
income tax purposes. If Shares issued upon exercise of an Incentive Stock Option are disposed of
within such one-year period or within two years after the Option grant date, any gain realized on
such disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the lesser



 









 







of (i) the
fair market value of the Shares on the date of exercise, or (ii) the sale price of the Shares.



               (ii) Notice of Disqualifying Dispositions. With respect to any Shares issued upon
exercise of an Incentive Stock Option, if Optionee sells or otherwise disposes of such Shares on or
before the later of (i) the date two years after the Option grant date, or (ii) the date one year
after the date of exercise, Optionee shall immediately notify the Company in writing of such
disposition. Optionee acknowledges and agrees that he or she may be subject to income tax
withholding by the Company on the compensation income recognized by Optionee from the early
disposition by payment in cash or out of the current earnings paid to Optionee.



          (b) Nonstatutory Stock Option. If this Option does not qualify as an Incentive Stock
Option, there may be a regular federal (and state) income tax liability upon the exercise of the
Option. Optionee will be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. If Optionee is an Employee, the Company will be required to
withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the time of exercise.
If Shares issued upon exercise of a Nonstatutory Stock Option are held for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes.



     9. Lock-Up Agreement. In connection with the initial public offering of the Company’s
securities and upon request of the Company or the underwriters managing any underwritten offering
of the Company’s securities, Optionee hereby agrees not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any securities of the Company however
and whenever acquired (other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period of time (not to
exceed 180 days) from the effective date of such registration as may be requested by the Company or
such managing underwriters and to execute an agreement reflecting the foregoing as may be requested
by the underwriters at the time of the public offering.



     10. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and provisions thereof (and has had an
opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and
agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby
agrees to accept as binding, conclusive and final all decisions and interpretations of the Plan
Administrator regarding any questions relating to the Option. In the event of a conflict between
the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement,
the Plan terms and provisions shall prevail. The Option, including the Plan, constitutes the
entire agreement between Optionee and the Company on the subject matter hereof and supersedes all
proposals, written or oral, and all other communications between the parties relating to such
subject matter.



 









 





[Signature Page Follows]






 









 








     This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one document.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Fallbrook Technologies Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 


	 	 	 	 	 	 

	 	 
	Signature
	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	William G. Klehm, III	 	 
	 
	 	 	 	 	 	 	 	 
	«Name»

	 	 	 	Title:
	 	President & CEO	 	 






Dated: