EXHIBIT (d)(3)
Form of Incentive Stock Option Agreement
Under 1998 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by ▇▇▇▇▇, Inc., a Massachusetts
corporation (the "Company"), on [Date], (the "Grant Date") to [Name] (the
"Participant"), an employee of the Company or one of its wholly-owned
subsidiaries, as defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended and any regulations promulgated thereunder (the"Code"), of an option
to purchase, in whole or in part, on the terms provided herein and in the
Company's 1998 Stock Incentive Plan (the "Plan"), a total of [________] shares
of common stock, $.10 par value per share, of the Company ("Common Stock") (the
"Shares") at $[________] per Share. Unless earlier terminated, this option shall
expire on, and cannot be exercised on or after, [one year after the expiration
date of the surrendered eligible option] (the "Expiration Date").
It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Code. For so long as the
Code shall so provide, options granted to any employee which are intended to
constitute incentive stock options shall not constitute incentive stock options
to the extent that such options, in the aggregate, become exercisable for the
first time in any one calendar year for shares of Common Stock with an aggregate
fair market value (determined as of the respective date or dates of grant) of
more than $100,000. Any shares granted above the $100,000 limit are considered
non-qualified stock options. Except as otherwise indicated by the context, the
term "Participant", as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.
2. Vesting Schedule.
Except as otherwise provided in this Agreement, this option may be
exercised prior to the Expiration Date in installments as to not more than the
number of shares set forth in the table below during the respective installment
periods set forth in the table below.
Number of
Shares as to which
Exercise Period Option is Exercisable
Prior to [Date], -0-
On or after [Date],
but prior to [Date], [______]
On or after [Date],
but prior to [Date], [______]
On or after [Date],
but prior to [Date], [______]
On or after [Date],
but prior to [Date], (the Expiration Date). [______]
The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Expiration Date or the termination
of this option under Section 3 hereof or the Plan.
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3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in
writing specifying the number of Shares to be exercised, the option exercise
price per Share and delivery instructions for the Shares, signed by the
Participant, and received by the Company at its principal office, accompanied by
payment in full as follows:
(i) in cash or by check, payable to the order of the Company; or
(ii) by delivery of cash or a check equal to the exercise price of
the options by a creditworthy broker;
(iii) by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined
by (or in a manner approved by) the Board in good faith, with
written proof that the Common Stock was owned by the
Participant at least twelve months prior to such delivery; or
(iv) by any combination of the above permitted forms of payment.
The Participant may purchase less than the number of shares covered hereby,
provided that no partial exercise of this option may be for any fractional share
or for fewer than ten whole shares.
(b) No Special Employment Rights; Agreement Not To Compete. Nothing
contained in the Plan or this option shall be construed or deemed by any person
under any circumstances to bind the Company to continue the employment of the
Participant for the period within which this option may be exercised. The
Company expressly reserves the right at any time to dismiss or otherwise
terminate its relationship with a Participant free from any claim under the
Plan. In consideration of the benefits herein conferred, the Participant hereby
agrees and covenants with the Company that for a period of two (2) years
following any termination of his or her employment with the Company he or she
(i) will not hire, attempt to hire, solicit, or attempt to solicit to hire, or
assist another or participate in any manner in the hiring or soliciting for
hire, of any person employed by ▇▇▇▇▇ within one (1) year prior to the
termination of his or her employment; and (ii) will not "compete" with ▇▇▇▇▇.
For purposes of the Agreement, "competing" is defined as soliciting or doing
business with, directly or indirectly, any present or past customer of ▇▇▇▇▇, or
any prospective customer of ▇▇▇▇▇, with whom he or she has had contact in
connection with any business activity.
(c) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and has been
at all times since the date of grant of this option, an employee, officer or
director of, or consultant or advisor to, the Company or any parent or
subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an
"Eligible Participant").
(d) No Rights As Stockholder. No Participant shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to this option (including, without limitation, any rights to dividends
or distributions) until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to this option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then if the Participant exercises this option between the close of
business on the record date for such stock dividend and the close of business on
the distribution date for such stock dividend, he or she shall be entitled to
receive, on the distribution date, the stock dividend with respect to the shares
of Common Stock acquired upon such option exercise, notwithstanding the fact
that such shares were not outstanding as of the close of business on the record
date for such stock dividend.
(e) Termination of Relationship with the Company. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided in
paragraphs (f) and (g) below, the right to exercise this option shall terminate
fourteen (14) days after such cessation (but in no event after the Expiration
Date), provided that this option shall be exercisable only to the extent that
the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the
Expiration Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
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agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing such violation.
(f) Exercise Period Upon Death or Disability. If the Participant dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior
to the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (g) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant by the
Participant, provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Expiration Date.
(g) Discharge for Cause. If the Participant, prior to the Expiration
Date, is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean willful misconduct by the Participant or willful
failure by the Participant to perform his or her responsibilities to the Company
in the best interests of the Company (including, without limitation, breach by
the Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive. The Participant shall be considered to have been discharged
for "Cause" if the Company determines, within 30 days after the Participant's
resignation, that discharge for cause was warranted.
(h) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, in each case other than an Acquisition Event (as defined in the
Plan), the number and class of securities and exercise price per share subject
to this option shall be appropriately adjusted by the Company to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate.
4. Withholding.
No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.
6. Disqualifying Disposition.
If the Participant disposes of Shares acquired upon exercise of
this option within two years from the date of grant of the option or one year
after such Shares were acquired pursuant to exercise of this option, the
Participant shall notify the Company in writing of such disposition within 30
days of such disposition.
7. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this option.
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IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof. The undersigned hereby acknowledges receipt of a copy of
the Company's 1998 Stock Incentive Plan.
PARTICIPANT:
Signature:____________________________________
Name (please print):__________________________
Address: _____________________________________
_____________________________________
I have read the terms and conditions of the foregoing option and choose NOT
TO ACCEPT the option agreement.
PARTICIPANT:
Signature:____________________________________
Name (please print):__________________________
Address: _____________________________________
_____________________________________
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