NONTRANSFERABLE INCENTIVE
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), is dated as of [___________, ______], by
and between OSTEOTECH, INC., a Delaware corporation (the "Company"), and
[____________] (the "Optionee"), pursuant to the Company's 2000 Stock Plan (the
"Plan").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and Optionee hereby agree as follows:
1. Grant of Option.
The Company hereby grants to Optionee, effective as of the date set forth
above (the "Grant Date"), the right and option (hereinafter called the "Option")
to purchase up to an aggregate of [________] shares of common stock, par value
$0.01 per share (the "Common Stock"), of the Company at a price of $[_____] per
share, upon the terms and conditions set forth in this Agreement and in the
Plan. This Option is intended to be an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The Option shall terminate at the close of business ten (10) years from the
Grant Date, or such shorter period as is prescribed herein. Optionee shall not
have any of the rights of a stockholder with respect to the shares subject to
the Option until such shares shall be issued to Optionee upon the proper
exercise of the Option.
2. Duration and Exercisability.
(a) Subject to the terms and conditions set forth herein, this Option shall
become exercisable by the Optionee for the following installments of shares of
Common Stock in accordance with the following schedule. The Optionee must be
employed by the Company on the relevant anniversary date set forth below in
order for the corresponding installment to become exercisable. As the Option
becomes exercisable for such installment, those installments shall accumulate
and the Option shall remain exercisable for the accumulated installments until
the Option expires pursuant to Section 1 or terminates pursuant to Section 3 or
Section 4.
Shares for Which Option is Exercisable
Date Percentage Number
[1st anniversary of grant date] 25% [____]
[2nd anniversary of grant date] 25% [____]
[3rd anniversary of grant date] 25% [____]
[4th anniversary of grant date] 25% [____]
(b) During the lifetime of Optionee, the Option shall be exercisable only
by Optionee and shall not be assignable or transferable by Optionee, other than
as provided for in accordance with the provisions of Section 4(c) of this
Agreement.
3. Adjustment of Shares.
(a) The exercise price and the number of shares purchasable upon exercise
of the Options may be adjusted by the Compensation Committee (the "Compensation
Committee") of the Board of Directors of the Company (the "Board") in accordance
with Section 4(c) of the Plan upon the occurrence of certain corporate actions
that may affect the Common Stock.
(b) In the event of a dissolution or liquidation of the Company the Option
shall terminate, provided, if a period of one (1) year from the date of the
grant of the Option shall have elapsed, that the Optionee shall have the right
immediately prior to such dissolution or liquidation to exercise such portion of
the Option, in whole or in part, as determined in the sole discretion of the
Board, whether or not the Optionee's right to exercise the Option has otherwise
vested pursuant to the terms of Section 2 of this Agreement. The Board shall
also have the right to waive such one (1) year period.
(c) In the event that the Company is a party to a merger or consolidation,
the Option shall be subject to the agreement of merger or consolidation. Such
agreement, without the Optionee's consent, may provide for:
(i) The continuation of the Option by the Company (if the Company is the
surviving corporation);
(ii) The assumption of the Plan and the Option by the surviving corporation
or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for the Option; or
(iv) The cancellation of the Option provided that the Optionee shall have
the right immediately prior to such merger or consolidation to exercise the
Option in whole or in part, whether or not the Optionee's right to exercise the
Option has otherwise accrued pursuant to Section 2 of this Agreement.
4. Effect of Termination of Employment.
(a) In the event that Optionee shall cease to be employed by the Company or
its subsidiaries, if any, for any reason other than termination for cause (as
defined in Section 4(b) hereof) or Optionee's death or disability (as such term
is defined in Section 4(c) hereof), Optionee shall have the right to exercise
the Option at any time within three (3) months after such termination of
employment to the extent of the full number of shares Optionee was entitled to
purchase under the Option on the date of termination; provided, however, that
this Option shall not be exercisable after the expiration of the term of the
Option if earlier.
(b) In the event that Optionee shall cease to be employed by the Company or
its subsidiaries, if any, upon termination for cause, the Option shall be
terminated as of the date of the act giving rise to such termination.
Termination for cause shall mean termination of the Optionee's employment with
the Company for the following acts: dishonesty, fraud, conviction or confession
of a felony or of a crime involving moral turpitude, destruction or theft of the
Company's property, physical attack on a fellow employee, willful malfeasance or
gross negligence, refusal or failure to perform job duties (other than failure
resulting from disability), misconduct materially injurious to the Company,
participation in fraud against the Company, entering into competition against
the Company, and/or a material breach or threatened material breach of any
agreements with the Company.
2
(c) If Optionee shall die while this Option is still exercisable according
to its terms, or if Optionee's employment with the Company is terminated because
Optionee has become disabled (within the meaning of Code Section 22(e)(3)) while
in the employ of the Company or a subsidiary, if any, and Optionee shall not
have fully exercised the Option, such Option may be exercised at any time within
twelve (12) months after Optionee's death or date of termination of employment
for disability by Optionee, personal representatives or administrators, or
guardians of Optionee, as applicable, or by any person or persons to whom the
Option is transferred by will or the applicable laws of descent and
distribution, to the extent of the full number of shares Optionee was entitled
to purchase under the Option on the date of Optionee's death, the date of
termination of Optionee's employment with the Company, if earlier, or the date
of termination of Optionee's employment with the Company for such disability,
and subject in all cases to the condition that no Option shall be exercisable
after the expiration of the term of the Option.
5. Manner of Exercise.
(a) The Option may be exercised only by Optionee or other proper party, as
provided herein, by delivering within the period during which the Option is
exercisable hereunder written notice to the Company at its principal office. The
notice shall state the number of shares as to which the Option is being
exercised and be accompanied by payment in full of the Option price for all
shares designated in the notice.
(b) Optionee may pay the Option price in cash, by check (bank check,
certified check or personal check), by money order, or with the approval of the
Compensation Committee (i) by delivering to the Company for cancellation shares
of Common Stock of the Company with a fair market value as of the date of
exercise equal to the exercise price of the Option or the portion thereof being
paid by tendering such shares or (ii) by delivering to the Company a combination
of cash and Common Stock of the Company with an aggregate fair market value
equal to the exercise price of the Option. For these purposes, the fair market
value of the Company's shares of Common Stock of the Company as of any date
shall be as reasonably determined by the Compensation Committee pursuant to the
Plan.
6. Notices.
All notices or other communications which are required or permitted
hereunder shall be deemed to be sufficient if contained in a written instrument
given by personal delivery, air courier or registered or certified mail, postage
prepaid, return receipt requested, addressed to such party at the address set
forth below or such other address as may thereafter be designated in a written
notice from such party to the other party:
3
if to the Company, to:
Attention: Chief Financial Officer
Osteotech, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
if to the Optionee, to:
[Optionee's Name]
[Optionee's Address]
All such notices, advances, and communications shall be deemed to have been
delivered and received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of air courier, on the business day after the date
when sent and (c) in the case of mailing, on the third business day following
such mailing.
7. Miscellaneous.
(a) This Option is issued pursuant to the Company's 2000 Stock Plan and is
subject to its terms. The terms of the Plan are available for inspection during
business hours at the principal offices of the Company.
(b) This Agreement shall not confer on Optionee any right with respect to
continuance of employment by the Company or any of its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
at any time. Optionee shall have none of the rights of a stockholder with
respect to shares subject to this Option until such shares shall have been
issued to Optionee upon exercise of this Option.
(c) The exercise of all or any parts of this Option shall only be effective
at such time as the sale of Common Stock pursuant to such exercise will not
violate any state or federal securities or other laws.
(d) The Company shall at all times during the term of the Option reserve
and keep available such number of shares as will be sufficient to satisfy the
requirements of this Agreement.
(e) No waiver of any breach or condition of this Agreement shall be deemed
to be a waiver of any other or subsequent breach or condition, whether of like
or different nature.
(f) The Optionee shall take whatever additional actions and execute
whatever additional documents the Company may in its judgment deem necessary or
advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Optionee pursuant to the express provisions of this
Agreement.
(g) This Agreement shall be governed by and construed in accordance with,
the laws of the State of Delaware.
4
(h) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument.
(i) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and thereof, merging any and all prior
agreements.
(j) In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the
exercise of the Option and in order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to insure that, if necessary, all applicable federal or state
payroll, withholding, income or other taxes are withheld or collected from
Optionee. With the Company's concurrence, Optionee may elect to satisfy his or
her federal and state income tax withholding obligations upon exercise of this
Option by (i) having the Company withhold a portion of the shares of Common
Stock otherwise to be delivered upon exercise of such Option having a fair
market value equal to the amount of federal and state income tax required to be
withheld upon such exercise, in accordance with such rules as the Company may
from time to time establish, or (ii) delivering to the Company shares of its
Common Stock other than the shares issuable upon exercise of such Option with a
fair market value equal to such taxes, in accordance with such rules.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement as of the
date set forth above.
OSTEOTECH, INC.
By:_______________________________
Name:
Title:
By:_____________________________
[Optionee]
5
FIRST AMENDMENT TO NONTRANSFERABLE INCENTIVE STOCK OPTION AGREEMENT
This Amendment, dated as of [___________, ______], is made by and between
OSTEOTECH, INC., a Delaware corporation (the "Company"), and [___________] (the
"Optionee"), pursuant to the Company's 2000 Stock Plan.
Recitals
WHEREAS, the Company and the Optionee entered into that certain Nontransferable
Incentive Stock Option Agreement (the "Original Option Agreement"), dated as of
[______,_____], pursuant to which the Company granted Optionee the right and
option to purchase the Company's shares of common stock;
WHEREAS, the Company and the Optionee desire to amend Section 4 and other
relevant Sections of the Original Option Agreement to extend the exercise period
of the Option in the event of the Optionee's termination of employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set
forth herein, the Company and the Optionee hereby agree to the following:
1. Section 2(b) of the Original Option Agreement is hereby amended and
restated with the following:
"(b) During the lifetime of Optionee, the Option shall be exercisable
only by Optionee and shall not be assignable or transferable by Optionee,
other than as provided for in accordance with provision of Section 4(b) of
this Agreement."
2. Section 4 of the Original Option Agreement is hereby amended and
restated with the following:
"4. Effect of Termination of Employment
(a) In the event that Optionee shall cease to be employed by the
Company or its subsidiaries, if any, for any reason, the Optionee shall
have the right to exercise the Option through the expiration of the Option
Term.
(b) If the Optionee shall die or if Optionee has become disabled, such
Option may be exercised at any time through the expiration of the term of
the Option, by Optionee, personal representatives or administrators, or
guardians of Optionee, as applicable, or by any person or persons to whom
the Option is transferred by will or the applicable laws of descent and
distribution."
6
3. Optionee acknowledges that all Options issued pursuant to the Original
Option Agreement, as amended, that are exercised more than 90 days after the
Optionee's termination of employment with the Company will no longer be deemed
to be incentive stock options and will automatically become non-qualified
options.
4. Except as set forth herein, the Original Option Agreement remains
unchanged and in full force and effect. In case of any conflict between the
Original Option Agreement, as amended, and the 2000 Stock Option Plan, the
Original Option Agreement, as amended, shall control.
IN WITNESS WHEREOF, the Company and the Optionee hereto have caused this
Amendment to be duly executed as of the date first written above.
OSTEOTECH, INC.
By. _____________________ By. _____________________
Name: [Optionee]
Title:
7