1
EXHIBIT 4.02
▇▇▇▇.▇▇▇, Inc.
Incentive Stock Option Grant Agreement under the
1999 Equity Incentive Plan
Number of Shares: ______________________
Date of Grant: ______________________
▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Corporation"), hereby
grants to __________________ (the "Participant"), as of the date stated above,
an option (the "Option") to purchase the number of shares stated above (the
"Shares") of the Corporation's Common Stock no par value (the "Common Stock"),
pursuant to the Corporation's 1999 Equity Incentive Plan (the "Plan"), a copy of
which is attached hereto and is incorporated herein in its entirety by this
reference.
The Participant hereby accepts the Option, subject to the terms and
conditions set forth in the Plan as fully as if they were set forth herein, and
to the following additional terms and conditions:
1. Type of Option. It is intended that the Option be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Exercise Price. The price at which Shares may be purchased pursuant
to the Option is $ per share.
3. Option Period. The Option expires ten years from the date of grant,
as set forth above. The Participant should take special note that the Option may
be terminated early by certain events including termination of employment,
disability or death, as provided in the Plan.
4. Vesting of Right to Exercise. During the period commencing on the
date of grant and continuing until the date that is one year from the date of
grant (the "Anniversary Date"), the Option shall not be exercisable to any
extent. Commencing on the first day following the Anniversary Date and during
the ensuing month, the Option may be exercised for not more than one-quarter
(1/4) of the Shares. Thereafter, on the last day of such ensuing month and on
the last day of each of the thirty-six (36) months thereafter, the Option may be
exercised (to the extent not already exercised) for not more than an additional
one-forty-eighth (1/48) of the Shares. Thereafter, and for the duration of the
Option, the Option may be exercised in full. [In the event that there is a
"Change of Control" of the Company (as such term is defined in the Plan), then,
immediately prior to the consummation of such Change of Control, the Option
shall become exercisable for such additional number of Shares as shall be equal
to the number of Shares which would have vested over the next twelve (12) months
but for the occurrence of the Change of Control. Such number of Shares for which
the Option shall become exercisable by reason of a Change in Control shall be in
addition to the number of Shares for which the Option is then exercisable as
calculated pursuant to the first sentence of this Section 4.]
19
2
5. Exercise. (a) The Option may be exercised from time to time with
respect to all or any part of the Shares as to which it is exercisable at the
time; provided, however, that it may not be exercised as to less than ten
percent of the Shares at any one time, except with respect to the remaining
Shares then purchasable under the Option, if less than ten percent of the
Shares. No fractional Shares may be purchased except in combination with a
fraction or fractions under another presently exercisable option or options
granted under the Plan, and then only to the extent that such combination equals
a full Share.
(b) To exercise the Option, the Participant (or other person exercising
the Option) must deliver to the Corporation the following:
1. a completed and signed notice of exercise, in the form of Attachment
A hereto, stating the number of Shares to be purchased. If the Option is
being exercised by a person other than the Participant, the notice of
exercise must be accompanied by proof of the right of such person to
exercise the Option and such other pertinent information as the
Corporation deems necessary;
2. two (2) signed Stock Restriction Agreements (the "Stock Restriction
Agreement"), in the form attached hereto as Attachment B, and such other
agreements, instruments or documents as the Company may reasonably
require to comply with the requirements of the Securities Act of 1933,
as amended, or any applicable state securities laws. The shares
purchased pursuant to exercise of the Option shall be subject to the
restrictions and limitations set forth in such agreements; and
3. payment in full of the exercise price for the Shares being purchased
(i) in cash or by certified check, bank draft or money order made
payable to the order of the Company, (ii) by delivery of shares of
Common Stock having a fair market value (as determined by the Board in
good faith in its reasonable discretion) on the date of exercise equal
to the exercise price, (iii) by a combination of cash and Common Stock,
or (iv) if previously approved by the Board, by a combination of cash,
Common Stock and a promissory note in accordance with the terms of the
Plan; provided, however, that payment of the exercise price by delivery
of shares of Common Stock of the Company already owned by the
Participant may be made only if such payment does not result in a charge
to earnings for financial accounting purposes as determined by the Board
(unless otherwise permitted by the Board).
In addition, the exercise of an Option shall be subject to satisfaction of all
conditions the Board may impose on the exercise of such Option pursuant to this
Agreement or the Plan, and any such exercise shall be effective only after all
such conditions have been satisfied.
6. No Rights as Stockholder. The Participant (or any other person
entitled to exercise the Option) shall not be entitled to any rights as a
stockholder of the Corporation with respect to any Shares covered by the Option
until such Shares shall have been registered on the stock transfer books of the
Corporation in the name of the Participant (or such other person).
7. Notice of Premature Disposition. If, within two years from the date
of grant or within one year after the transfer of Shares to the Participant upon
exercise of the Option, the Participant makes a disposition (as defined in
Section 424(c) of the Code) of any Shares, the Participant shall notify the
Clerk of the Corporation within 10 days after such disposition.
8. Compliance with Laws, Regulations and Rules. The Plan, this
Agreement, the Option and the obligation of the Corporation to sell and deliver
the Shares upon exercise of the Option are and shall be subject to (a) all
applicable laws, government regulations and rules and (b) all applicable
regulations and rules adopted by the Board in accordance with the Plan. If at
any time the Board determines in its discretion that the listing, registration
or qualification, on any securities exchange or under any federal or state law,
of the Shares deliverable upon exercise of the Option, or the consent or
approval of any regulatory body, or compliance with any law, rule or regulation,
is necessary or desirable as a condition of, or in connection with, the delivery
or purchase of Shares, then exercise of the Option shall not be effective
20
3
unless such listing, registration, qualification, consent, approval or
compliance shall have been effected or obtained free of any conditions not
acceptable to the Board.
9. Legend on Certificates. Each certificate representing the Shares
shall bear restrictive legends referring to the restrictions on transfer and
repurchase rights of the Company contained in the Stock Restriction Agreement
and the restrictions on transfer imposed by the Securities Act of 1933, as
amended, and any applicable exemption therefrom pursuant to which the Shares may
be issued.
10. No Employment Rights. Nothing in the Plan, the Option or this Option
Agreement confers upon the Participant any right to continued employment or
interferes with the right of the Corporation to terminate the Participant's
employment.
11. Taxes. As a condition of issuance of Shares under this Option, the
Participant agrees that, if at the time the Option is exercised the Board
determines that under applicable law and regulations the Corporation could be
liable for the withholding of any federal or state tax with respect to a
disposition of the Shares received upon exercise, the Board may require the
Participant to give, or to agree to give, such security as the Board deems
adequate to meet the potential liability of the Corporation for the withholding
of tax, and to augment such security from time to time in any amount reasonably
deemed necessary by the Board to preserve the adequacy of such security.
12. Definition. As used in this Agreement, the term "Corporation" shall
include any subsidiary or parent of the Corporation as defined in Sections
424(e) and (f) of the Code.
13. Amendments. The Board may at any time or times amend the Plan or the
Option for the purpose of satisfying the requirements of any changes in
applicable laws or regulations or for any other purpose which at the time may be
permitted by law. No termination or amendment of the Plan or amendment of the
Option shall, without the Participant's consent, adversely affect the
Participant's rights under the Option.
14. Consistency with Plan. If there is any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the latter shall
control.
▇▇▇▇.▇▇▇, Inc.
By
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO
------------------------------------
Participant
21
4
Attachment A
Form of Exercise of Stock Option
(To be completed and signed only on exercise of Option)
I hereby exercise the stock option (the "Option") granted by ▇▇▇▇.▇▇▇, Inc. (the
"Corporation") to me on ___________________, ______, subject to all the terms
and provisions thereof as contained in the Incentive Stock Option Grant
Agreement of the same date signed by me concerning such Option and in the
▇▇▇▇.▇▇▇ Inc. 1999 Equity Incentive Plan referred to therein, and notify you of
my desire to purchase _______ Shares pursuant to the Option.
Enclosed is my check in the sum of $ __________ in full payment for such Shares
and applicable withholding taxes.
I also enclose completed and signed duplicate Stock Restriction Agreements in
the required form.
DATED: ________________, _______.
Signature:
------------------------------------
Name: ______________________________
5
ATTACHMENT B
▇▇▇▇.▇▇▇, Inc.
Stock Restriction Agreement
AGREEMENT (this "Agreement"), dated as of ______________, by and between
▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company"), and _____________ (the
"Stockholder"), who is purchasing ________ shares of the Company's Common Stock
pursuant to an award of Restricted Stock or pursuant to exercise of an option
(the "Option") under the Company's 1999 Equity Incentive Plan (the "Plan") (such
shares of Common Stock presently owned and any additional shares which the
Stockholder may acquire upon exercise of the Option or otherwise being
hereinafter collectively called the "Shares").
WHEREAS, at or prior to the date this Agreement, the Stockholder has
purchased all or a portion of the Shares; and
WHEREAS, the Company and the Stockholder believe it is in the best
interests of the Company and of the Stockholder that certain restrictions be
placed upon all of the Shares;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Restrictions on Transfer.
(a) No Transfer. The Stockholder shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer"), any of the Shares, or any interest therein,
unless such transfer shall be made in compliance with the provisions of Section
2 of this Agreement.
(b) Investment Representation. The Stockholder hereby
represents, warrants and agrees with the Company that he or she is acquiring the
Shares for his or her own account, for investment and not with a view to or in
connection with any distribution thereof. The Stockholder shall not transfer any
Shares unless either (i) a registration statement under the Securities Act of
1933, as amended (the "Act"), with respect to the Shares shall have become, and
continue to be, effective, or (ii) the Company receives an opinion of counsel
that registration of such Shares is not required under the Act.
2. Right of First Refusal on Dispositions.
(a) Receipt of Third-Party Offer. If at any time the Stockholder
desires to sell for cash, cash equivalents or any other form of consideration
(including a promissory note) all or any part of his Shares pursuant to an offer
or proposed offer from a third party (the "Proposed Transferee"), the
Stockholder shall submit a written offer (the "Offer") to sell such Shares (the
"Offered Shares") to the Company on terms and conditions, including price, not
less favorable to the Company than those on which the Stockholder proposes to
sell such Offered Shares to the Proposed Transferee. The Offer shall disclose
the identity of the Proposed Transferee, the number of Offered Shares proposed
to be sold, the total number of Shares owned by the Stockholder, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Offer shall further state that the Company
may acquire, in accordance with the provisions of this Agreement, all or any
portion of the Offered Shares for the price and upon the other terms and
conditions, including deferred payment (if applicable), set forth therein.
6
(b) Company Notice of Intent to Purchase. If the Company desires
to purchase all or any portion of the Offered Shares, the Company shall give to
the Stockholder written notice of the number of Offered Shares to be purchased
by it, which notice shall be delivered in person or mailed to the Stockholder
within twenty (20) days of the date of the Offer. Such communication shall, when
taken in conjunction with the Offer, be deemed to constitute a valid, legally
binding and enforceable agreement for the sale and purchase of such Offered
Shares. Sale of the Offered Shares to be sold to the Company pursuant to this
Section 2 shall be made at the offices of the Company on the forty-fifth (45th)
day following the date of the Offer (or, if such day is not a business day, then
on the next succeeding business day). Such sale shall be effected by the
Stockholder's delivery to the Company of a certificate or certificates
evidencing the Offered Shares to be purchased by the Company, duly endorsed for
transfer to the Company, against payment to the Stockholder of the purchase
price therefor by the Company by a certified or cashier's check.
(c) Sale to Third Party. If, within twenty (20) days of its
receipt of the Offer, the Company fails to deliver written notice to the
Stockholder of its intention to purchase all of the Offered Shares (the Offered
Shares which the Company does not elect to purchase being referred to as the
"Refused Shares"), the Refused Shares not so purchased may be sold by the
Stockholder at any time within ninety (90) days after the date the Offer was
made to the Proposed Transferee, at not less than the price and upon other terms
and conditions, if any, not more favorable to the Proposed Transferee than those
specified in the Offer. If the Refused Shares are not sold within the ninety
(90) day period, they shall continue to be subject to the requirements of a
prior offer pursuant to this Section 2. If the Refused Shares are sold pursuant
to this Section 2 to any purchaser who is not a party to this Agreement, the
Company, may at its option, require the purchaser to execute and deliver a new
Stock Restriction Agreement in substantially the form of this Agreement
containing substantially the same terms as those set forth herein.
(d) Permitted Transfers. The Stockholder shall have the right to
make Permitted Transfers of the Stockholder's Shares and the provisions of
subsections (a), (b) and (c) above shall not apply to any such Permitted
Transfer by the Stockholder. For purposes of this Agreement, "Permitted
Transfer" shall mean any transfer by the Stockholder during his lifetime of all
or any portion of his Shares (i) to the Company, (ii) to another holder of
issued and outstanding shares of capital stock of the Company, (iii) to or for
the benefit of any spouse, child or grandchild of the Stockholder, or to a trust
for the benefit of any of the foregoing, including transfers by will or the laws
of descent and distribution; provided, however, that, it shall be a condition of
each such transfer, that (x) the transferee agrees to be bound by the terms of
this Agreement as though no such transfer had taken place, and that (y) the
Stockholder has complied with all applicable law in connection with such
transfer.
3. Effect of Prohibited Transfer. The Company shall not be required (a)
to transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) to treat as owner of such Shares or to pay dividends to any transferee to
whom any such Shares shall have been so sold or transferred.
4. Restrictive Legend. All certificates representing Shares shall have
affixed thereto a legend in substantially the following form, in addition to any
other legends that may be required under federal or state securities laws:
The shares of stock represented by this certificate are subject to
restrictions upon transfer set forth in a certain Stock Restriction
Agreement between the corporation and the registered owner of this
certificate. The Corporation will furnish a copy of such Agreement to
the holder of this certificate upon written request and without charge.
5. Adjustments for Stock Splits, Stock Dividends, Etc. If from time to
time while this Agreement shall remain in force and effect there is any stock
split-up, stock dividend, stock distribution or other reclassification of the
Common Stock of the Company, any and all new, substituted or additional
securities to which the Stockholder is entitled by reason of his ownership of
Shares shall be immediately subject to the restrictions on transfer and other
provisions of this Agreement in the same manner and to the same extent as such
Shares.
6. Miscellaneous.
(a) Termination of Restrictions on Transfer. This Agreement, and
the obligations of the Stockholder and the Company hereunder, shall terminate
upon the earliest to occur of: (i) the closing of the first underwritten public
7
offering by the Company under the Securities Act of 1933 of any of its equity
securities for its own account for cash; (ii) the sale of all or substantially
all of the shares of capital stock, the assets or business of the Company, by
merger, sale of assets or otherwise; or (iii) the expiration of ten (10) years
from the date of this Agreement. The sale of the Shares pursuant to any of the
transactions described in clauses (i) and (ii) of the preceding sentence shall
not be subject to the provisions of said Section 1(a) and Section 2.
(b) Severability; Governing Law. If any provisions of this
Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable in accordance
with their terms. This Agreement shall be governed by, and construed in
accordance with, the laws of Massachusetts.
(c) Injunctive Relief. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the Company if the
Stockholder fails to comply with the provisions of this Agreement and that, in
the event of any such failure, the Company will not have an adequate remedy at
law. The Company shall, therefore, be entitled to obtain specific performance of
each of the Stockholder's obligations hereunder and to obtain immediate
injunctive relief. The Stockholder shall not urge, as a defense to any
proceeding for such specific performance or injunctive relief, that the Company
has an adequate remedy at law.
(d) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.
(e) Modification or Amendment. Neither this Agreement nor any
provision hereof can be modified, amended, changed, discharged or terminated
except by an instrument in writing, signed by the Stockholder and the Company.
(f) Notices. All notices required or permitted hereunder shall
be in writing and deemed effectively given upon personal delivery, upon deposit
with the United States Post Office, by registered, certified mail, postage
prepaid, or upon deposit with a recognized express overnight courier service,
addressed, if to the Company, to ▇▇▇▇.▇▇▇, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇. Attention: Treasurer, and if to the Stockholder, to the address shown
beneath his or her respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this subsection (f).
(g) Merger Provision. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings, whether
oral or written, of the parties hereto concerning the subject matter hereof.
(h) Waivers. Any provision contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(i) Amendment. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Stockholder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
▇▇▇▇.▇▇▇, Inc.
By:
---------------------------------
its
8
ACCEPTED:
------------------------------------
(Signature of Stockholder)
------------------------------------
(Printed Name of Stockholder)
------------------------------------
(Residence Street Address)
------------------------------------
(City) (State) (Zip Code)