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EXHIBIT 10.08
ATLANTIC DATA SERVICES, INC.
INCENTIVE STOCK OPTION AGREEMENT
Atlantic Data Services, Inc., a Massachusetts corporation (the
"Company"), hereby grants as of [DATE] to [NAME OF EMPLOYEE] (the "Employee"),
an option to purchase a maximum of [NUMBER NOT EXCEEDING AVAILABLE SHARE LIMIT]
shares (the "Option Shares") of its Class A Common Stock, $.01 par value
("Common Stock"), at the price of $[PRICE] per share, on the following terms and
conditions:
1. GRANT UNDER 1997 STOCK PLAN. This option is granted pursuant
to and is governed by the Company's 1997 Stock Plan, as it may be amended from
time to time in the future (the "Plan") and, unless the context otherwise
requires, terms used herein shall have the same meaning as in the Plan.
Determinations made in connection with this option pursuant to the Plan shall be
governed by the Plan as it exists on this date. Any inconsistency between this
Agreement and the Plan shall be governed by the Plan.
2. GRANT AS INCENTIVE STOCK OPTION; OTHER OPTIONS. This option is
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding the
above, this option shall be treated as a Non-Qualified Option if the Plan is not
approved by the Company's stockholders on or before October 31, 1998. This
option is in addition to any other options heretofore or hereafter granted to
the Employee by the Company or any Related Corporation (as defined in the Plan),
but a duplicate original of this instrument shall not effect the grant of
another option.
3. VESTING OF OPTION IF EMPLOYMENT CONTINUES. If the Employee has
continued to be employed by the Company or any Related Corporation on the
following dates, the Employee may exercise this option for the number of shares
of Common Stock set opposite the applicable date:
Less than one year from the date - [NUMBER] shares
hereof
One year but less than two years - an additional [NUMBER] shares
from the date hereof
Two years but less than three years - an additional [NUMBER] shares
from the date hereof
Three years but less than four years - an additional [NUMBER] shares
from the date hereof
Four years or more from the date - an additional [NUMBER] shares
hereof
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Notwithstanding the foregoing, in accordance with and subject to the provisions
of the Plan, the Committee may, in its discretion, accelerate the date that any
installment of this Option becomes exercisable. The foregoing rights are
cumulative and (subject to Sections 4 or 5 hereof if the Employee ceases to be
employed by the Company and all Related Corporations) may be exercised on or
before the date which is ten years from the date this option is granted.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OTHER THAN FOR CAUSE. If the Employee
ceases to be employed by the Company and all Related Corporations,
other than by reason of death or disability as defined in Section 5 or
termination for Cause as defined in Section 4(c), no further
installments of this option shall become exercisable, and this option
shall terminate (and may no longer be exercised) after the passage of
thirty days from the Employee's last day of employment, but in no event
later than the scheduled expiration date. In such a case, the
Employee's only rights hereunder shall be those which are properly
exercised before the termination of this option.
(b) TERMINATION FOR CAUSE. If the employment of the
Employee is terminated for Cause (as defined in Section 4(c)), this
option shall terminate upon the Employee's receipt of written notice of
such termination and shall thereafter not be exercisable to any extent
whatsoever.
(c) DEFINITION OF CAUSE. "Cause" shall mean conduct
involving one or more of the following: (i) the substantial and
continuing failure of the Employee, after notice thereof, to render
services to the Company or Related Corporation in accordance with the
terms or requirements of his or her employment; (ii) disloyalty, gross
negligence, willful misconduct, dishonesty or breach of fiduciary duty
to the Company or Related Corporation; (iii) the commission of an act
of embezzlement or fraud; (iv) deliberate disregard of the rules or
policies of the Company or Related Corporation which results in direct
or indirect loss, damage or injury to the Company or Related
Corporation; (v) the unauthorized disclosure of any trade secret or
confidential information of the Company or Related Corporation; or (vi)
the commission of an act which constitutes unfair competition with the
Company or Related Corporation or which induces any customer or
supplier to breach a contract with the Company or Related Corporation.
5. DEATH; DISABILITY.
(a) DEATH. If the Employee dies while in the employ of
the Company or any Related Corporation, this option may be exercised,
to the extent otherwise exercisable on the date of his or her death, by
the Employee's estate, personal representative or beneficiary to whom
this option has been assigned pursuant to Section 10, at any time
within one year after the date of death, but not later than the
scheduled expiration date.
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(b) DISABILITY. If the Employee ceases to be employed by
the Company and all Related Corporations by reason of his or her
disability (as defined in the Plan), this option may be exercised, to
the extent otherwise exercisable on the date of the termination of his
or her employment, at any time within one year after such termination,
but not later than the scheduled expiration date.
(c) EFFECT OF TERMINATION. At the expiration of the one
year period provided in paragraphs (a) or (b) of this Section 5 or the
scheduled expiration date, whichever is the earlier, this option shall
terminate (and shall no longer be exercisable) and the only rights
hereunder shall be those as to which the option was properly exercised
before such termination.
6. PARTIAL EXERCISE. This option may be exercised in part at any
time and from time to time within the above limits, except that this option may
not be exercised for a fraction of a share unless such exercise is with respect
to the final installment of stock subject to this option and cash in lieu of a
fractional share must be paid, in accordance with Paragraph 13(G) of the Plan,
to permit the Employee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
7. PAYMENT OF PRICE. The option price shall be paid in the
following manner:
(a) in cash or by check;
(b) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the proceeds from
the sale of the Option Shares and an instruction to the broker or
selling agent to pay that amount to the Company; or
(c) by any combination of the foregoing.
8. RESTRICTIONS ON RESALE; LEGEND.
(a) Option Shares may not be transferred without the
Company's written consent except by will, by the laws of descent and
distribution and in accordance with the provisions of Sections 17 and
18, if applicable. Option Shares will be of an illiquid nature and will
be deemed to be "restricted securities" for purposes of the Securities
Act of 1933, as amended (the "Securities Act"). Accordingly, such
shares must be sold in compliance with the registration requirements of
the Securities Act or an exemption therefrom. If upon exercise of this
Option the Option Shares are not subject to an effective registration
statement under the Securities Act, the Employee will deliver to the
Company an investment representation letter in form and substance
satisfactory to the Company. Each certificate evidencing any of the
Option Shares shall bear a legend substantially as follows:
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"The shares represented by this certificate are subject to
restrictions on transfer and may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of
except in accordance with and subject to all the terms and
conditions of a certain Incentive Stock Option Agreement dated
as of [DATE], a copy of which the Company will furnish to the
holder of this certificate upon request and without charge."
(b) TERMINATION OF RESTRICTIONS. The restrictions on
transfer contained in the first sentence of Section 8(a) and in
Sections 17 and 18 shall expire as to Option Shares on the earliest to
occur of (i) the tenth anniversary of the date of this Agreement, (ii)
a distribution to the public of shares of common stock of the Company
for an aggregate public offering price of at least $10 million pursuant
to an effective registration statement filed under the Securities Act
or any successor statute, or (iii) the occurrence of an Acquisition (as
defined in the Plan).
9. METHOD OF EXERCISING OPTION. Subject to the terms and
conditions of this Agreement, this option may be exercised by written notice to
the Company at its principal executive office, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of Option Shares for which it is being exercised and shall
be signed by the person or persons so exercising this option. Such notice shall
be accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Employee
and if the Employee shall so request in the notice exercising this option, shall
be registered in the name of the Employee and another person jointly, with right
of survivorship). In the event this option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Employee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option.
10. OPTION NOT TRANSFERABLE. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Employee's lifetime only the Employee can exercise this option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of
this option imposes no obligation on the Employee to exercise it.
12. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall
have no rights as a stockholder with respect to the Option Shares until such
time as the Employee has exercised this option by delivering a notice of
exercise and has paid in full the purchase price for the shares so exercised in
accordance with Section 9. Except as is expressly provided in the Plan with
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respect to certain changes in the capitalization of the Company, no adjustment
shall be made for dividends or similar rights for which the record date is prior
to such date of exercise.
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
15. EARLY DISPOSITION. The Employee agrees to notify the Company
in writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
16. WITHHOLDING TAXES. If the Company or any Related Corporation
in its discretion determines that it is obligated to withhold any tax in
connection with the exercise of this option, or in connection with the transfer
of, or the lapse of restrictions on, any Common Stock or other property acquired
pursuant to this option, the Employee hereby agrees that the Company or any
Related Corporation may withhold from the Employee's wages or other remuneration
the appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Employee on exercise of this option. The
Employee further agrees that, if the Company or any Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount
underwithheld.
17. COMPANY'S RIGHT OF FIRST REFUSAL.
(a) EXERCISE OF RIGHT. If the Employee desires to
transfer all or any part of the Option Shares to any person other than
the Company (an "Offeror"), the Employee shall: (i) obtain in writing
an irrevocable and unconditional bona fide offer (the "Offer") for the
purchase thereof from the Offeror; and (ii) give written notice (the
"Option Notice") to the Company setting forth the Employee's desire to
transfer such shares, which Option Notice shall be accompanied by a
photocopy of the Offer and shall set forth at least the name and
address of the Offeror and the price and terms of the Offer. Upon
receipt of the Option Notice, the Company shall have an assignable
option to purchase any or all of such Option Shares (the "Company
Option Shares") specified in the Option Notice, such option to be
exercisable by giving, within 30 days after receipt of the Option
Notice, a written counter-notice to the Employee. If the Company elects
to purchase any or all of such Company Option Shares, it shall be
obligated to purchase, and the Employee shall be obligated to sell to
the Company, such Company Option Shares at the
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price and terms indicated in the Offer within 30 days from the date of
delivery by the Company of such counter-notice.
(b) SALE OF OPTION SHARES TO OFFEROR. The Employee may,
for 60 days after the expiration of the 30-day option period as set
forth in Section 17(a), sell to the Offeror, pursuant to the terms of
the Offer, any or all of such Company Option Shares not purchased or
agreed to be purchased by the Company or its assignee; provided,
however, that the Employee shall not sell such Company Option Shares to
such Offeror if such Offeror is a competitor of the Company and the
Company gives written notice to the Employee, within 30 days of its
receipt of the Option Notice, stating that the Employee shall not sell
his or her Company Option Shares to such Offeror; and provided,
further, that prior to the sale of such Option Shares to an Offeror,
such Offeror shall execute an agreement with the Company pursuant to
which such Offeror agrees to be subject to the restrictions set forth
in this Section 17. If any or all of such Company Option Shares are not
sold pursuant to an Offer within the time permitted above, the unsold
Company Option Shares shall remain subject to the terms of this Section
17.
(c) ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. If
there shall be any change in the Common Stock of the Company through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination or exchange of shares, or the like,
the restrictions contained in Section 8 and this Section 17 shall apply
with equal force to additional and/or substitute securities, if any,
received by the Employee in exchange for, or by virtue of his or her
ownership of, Option Shares, except as otherwise determined by the
Board of Directors of the Company.
(d) FAILURE TO DELIVER OPTION SHARES. If the Employee
fails or refuses to deliver on a timely basis duly endorsed
certificates representing Company Option Shares to be sold to the
Company or its assignee pursuant to this Section 17, the Company shall
have the right to deposit the purchase price for such Company Option
Shares in a special account with any bank or trust company in the
Commonwealth of Massachusetts, giving notice of such deposit to the
Employee, whereupon such Company Option Shares shall be deemed to have
been purchased by the Company. All such monies shall be held by the
bank or trust company for the benefit of the Employee. All monies
deposited with the bank or trust company but remaining unclaimed for
two years after the date of deposit shall be repaid by the bank or
trust company to the Company on demand, and the Employee shall
thereafter look only to the Company for payment.
18. COMPANY'S RIGHT OF REPURCHASE.
(a) RIGHT OF REPURCHASE. The Company shall have the right
but not the obligation (the "Repurchase Right") to repurchase all, but
no less than all, of the Option Shares from the holder of this option,
upon the occurrence of any of the events specified in Section 18(b)
below (the "Repurchase Event"). The Repurchase Right may be exercised
by the Company within 60 days following the later of the date of the
exercise of this option or the date the Company receives actual
knowledge of such event (the
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"Repurchase Period"). The Repurchase Right shall be exercised by the
Company by giving the holder written notice on or before the last day
of the Repurchase Period of its intention to exercise the Repurchase
Right, and, together with such notice, tendering to the holder an
amount equal to (i) in the case of an event specified in Section
18(b)(i), (ii) or (iii) below, the greater of the option price or the
fair market value of the shares, and (ii) in the case of an event
specified in Section 18(b)(iv) below, the option price. The Company may
assign the Repurchase Right to one or more persons. Upon timely
exercise of the Repurchase Right in the manner provided in this Section
18(a), the holder shall deliver to the Company the stock certificate or
certificates representing the shares being repurchased, duly endorsed
and free and clear of any and all liens, charges and encumbrances.
If shares are not purchased under the Repurchase Right, the
Employee and his or her successor in interest, if any, will hold any
such shares in his or her possession subject to Section 17 and all of
the provisions of this Agreement.
(b) COMPANY'S RIGHT TO EXERCISE REPURCHASE RIGHT. The
Company shall have the Repurchase Right in the event that any of the
following events shall occur:
(i) The termination of the Employee's employment with the
Company and all Related Corporations, voluntarily or
involuntarily, for any reason whatsoever other than
for Cause (as defined in Section 4(c) hereof),
including death or permanent disability, prior to the
time this option shall be fully vested as provided in
Section 3 hereof;
(ii) The receivership, bankruptcy or other creditor's
proceeding regarding the Employee or the taking of
any of Employee's shares acquired upon exercise of
this option by legal process, such as a levy of
execution;
(iii) Distribution of shares held by the Employee to his or
her spouse as such spouse's joint or community
interest pursuant to a decree of dissolution,
operation of law, divorce, property settlement
agreement or for any other reason, except as may be
otherwise permitted by the Company; or
(iv) The termination of the Employee's employment for
Cause (as defined in Section 4(c) hereof).
(c) DETERMINATION OF FAIR MARKET VALUE. The fair market
value of the Option Shares shall be, for purposes of this Section 18,
determined in accordance with paragraph 6D of the Plan as of the date
of the Repurchase Event. The determination by the Board of Directors of
the fair market value shall be conclusive and binding.
(d) EXPIRATION OF COMPANY'S REPURCHASE RIGHT: The
Repurchase Right shall remain in effect until such time as (i) the
Option Shares are transferred in accordance with Section 17 hereof or
(ii) the provisions of Section 8(b) are satisfied.
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19. LOCK-UP AGREEMENT. The Employee agrees that in connection with
an underwritten public offering of Common Stock, upon the request of the Company
or the principal underwriter managing such public offering, the Option Shares
may not be sold, offered for sale or otherwise disposed of without the prior
written consent of the Company or such underwriter, as the case may be, for at
least 270 days after the effectiveness of the registration statement filed in
connection with such offering, or such longer period of time as the Board of
Directors may determine if all of the Company's directors and officers agree to
be similarly bound. The obligations under this Section 19 shall remain effective
for all underwritten public offerings with respect to which the Company has
filed a registration statement on or before the date five (5) years after the
closing of the Company's initial public offering, provided, however, that this
Section 19 shall cease to apply to any Option Share sold to the public pursuant
to an effective registration statement or an exemption from the registration
requirements of the Securities Act in a transaction that complied with the terms
of this Agreement.
20. ARBITRATION. Any dispute, controversy, or claim arising out
of, in connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the Commonwealth of
Massachusetts, pursuant to the rules then obtaining of the American Arbitration
Association. Any award shall be final, binding and conclusive upon the parties
and a judgment rendered thereon may be entered in any court having jurisdiction
thereof.
21. PROVISION OF DOCUMENTATION TO EMPLOYEE. By signing this
Agreement the Employee acknowledges receipt of a copy of this Agreement and a
copy of the Plan.
22. MISCELLANEOUS.
(a) NOTICES. All notices hereunder shall be in writing
and shall be deemed given when sent by certified or registered mail,
postage prepaid, return receipt requested, to the address set forth
below. The addresses for such notices may be changed from time to time
by written notice given in the manner provided for herein.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement
constitutes the entire agreement between the parties relative to the
subject matter hereof, and supersedes all proposals, written or oral,
and all other communications between the parties relating to the
subject matter of this Agreement. This Agreement may be modified,
amended or rescinded only by a written agreement executed by both
parties.
(c) SEVERABILITY. The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way
affect the validity, legality or enforceability of any other provision.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, subject to the limitations set forth
in Section 10 hereof.
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(e) GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the principles of the conflicts
of laws thereof.
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IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
ATLANTIC DATA SERVICES, INC.
XXX XXXXXXXXXXXX XXXX
XXXXXX, XX 00000
____________________________________
EMPLOYEE
By:_________________________________
____________________________________
Xxxxxx Xxxxxxx ____________________________________
Title
____________________________________
City State Zip Code
