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EXHIBIT 10.04
ATLANTIC DATA SERVICES, INC.
INCENTIVE STOCK OPTION AGREEMENT
ATLANTIC DATA SERVICES, INC. (the "Company), in consideration of the
value of the continuing services of ____________________ (hereafter called
"optionee") which continuing services the grant of this option is designed to
secure, and in consideration of the undertakings made herein by Optionee, and
pursuant to its 1992 Incentive Stock Option Plan (hereinafter called the
"Plan"), hereby grants to Optionee an option, evidenced by this option
agreement, exercisable for the period and upon the terms hereinafter set out, to
purchase _____ shares of Common Class A Stock ("Common Class A Stock") of the
Company at a price of $__________.
1. Term of Option - This option is granted and dated on the date set
forth next above the signature shown (sometimes hereinafter called the "Date of
Grant"), and will terminate and expire, to the extent not previously exercised,
for ______(_____) years after the Date of Grant, or at such earlier time as may
be specified in Section 4 hereof.
Except as otherwise provided in this Option Agreement or
the Plan, Optionee shall have the right to acquire shares under this Option
Agreement as follows:
(a) As of the first anniversary of the Date
of Grant and thereafter, Optionee may exercise rights to acquire 25%
of the Option Shares;
(b) As of the second anniversary of the Date
of Grant and thereafter, Optionee may exercise rights to acquire an
additional 25% of the Option Shares;
(c) As of the third anniversary of the Date
of Grant and thereafter, Optionee may exercise rights to acquire an
additional 25% of the Option Shares; and
(d) As of the fourth anniversary of the Date
of Grant and thereafter, Optionee may exercise rights to acquire an
additional 25% of the Option Shares.
2. Non-Transferability - This option shall not be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
During the lifetime of an optionee, the option is exercisable only by the
optionee except otherwise provided in Section 4(F) (2) of the Plan.
Any transfer in violation hereof shall be void and of no effect and shall
terminate this Option.
3. Manner of Exercise - Shares of Common Class A Stock purchased
upon exercise of the option shall at the time of purchase be paid for in full.
To the extent that the right to purchase shares has accrued hereunder, this
option may be exercised from time to time by written notice to the Company
stating the full number of shares with respect to which the option is being
exercised and the time of delivery thereof, which shall be at least fifteen days
after the giving of such notice unless an earlier date shall have been mutually
agreed upon, accompanied by full payment for the shares by certified or official
bank check or the equivalent thereof acceptable to the Company. At the time of
delivery, the Company shall, without stock transfer or issue tax to the optionee
(or other person entitled to exercise the option), deliver to the optionee (or
to such other person) at the
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principal office of the Company, or such other place as shall be mutually agreed
upon, a certificate or certificates for such shares, provided, however, that the
time of delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply, upon exercise of this
option, with applicable state and federal laws including, without limitation,
the Securities Act of 0000 (xxx "Xxx")xxx Xxxxxxxxxxxxx General Laws Chapter
000X (xxx "Xxxxx Xxx"). The Company shall also have the right to postpone the
exercise of any option for such period as may be required for it with reasonable
diligence to comply with applicable state and federal laws (including, without
limitation, the Act and the State Act) upon exercise of an option. The Company,
at the time of exercise, will require in addition that the registered owner
deliver an investment representation in form acceptable to the Company and its
counsel. At the time of exercise, the Company will also require that the
registered owner execute and deliver the Shareholders Agreement attached hereto
as Exhibit 1. The Company will place a legend on the certificate for such Common
Class A Stock restricting the transfer of same per the Plan and the Shareholders
Agreement. At no time shall the Company have any obligation or duty to register
under the Act or the State Act or any other laws the Common Class A Stock
issuable upon exercise of the options. As set forth in the Plan, the Company
shall not be required, upon the exercise of any option, to issue or deliver
shares hereunder prior to completion of registration or other qualification of
such shares under any state or Federal law, rule or regulation as the Company
shall determine to be necessary or desirable.
4. Termination of Employment or Directorship.
(a) In the event that Optionee's employment by the
Company and its Affiliates shall terminate (or if optionee is non-employee
director and his directorship with the Company or an Affiliate shall terminate),
and the provisions of Sections 4(F) (2), 4(F) (3) and 4(I) of the Plan do not
apply, the options granted to optionee pursuant to this Plan shall terminate
immediately.
(b) In the event that Optionee shall die (a) while in
the employment of the Company (or an Affiliate) or (b) while he is a director of
the Company or if the Optionee's employment by the Company (or an Affiliate) or
his directorship on the Board of Directors is terminated because Optionee has
become disabled within the meaning of Section 105(d) (4) of the Code, optionee,
his estate, or beneficiary shall have the right to exercise his options at any
time within twelve months from the date of (i) the death of such optionee or
(ii) termination of his employment due to disability, as the case may be, to the
same extent Optionee was entitled to exercise such option as of the date of such
death or termination due to disability. Notwithstanding the foregoing, the
provisions of this Paragraph (b) shall be subject to Sections 4(B), 4(H), and
4(I) of the Plan as may earlier terminate the option.
(c) In the event that termination of employment or
directorship is due to retirement with the consent of the Company, the optionee
shall have the right to exercise his option at any time within three months
after such retirement to the extent he was entitled to exercise the same
immediately prior to retirement. Notwithstanding the foregoing, the provisions
of this Paragraph (c) shall be subject to Sections 4(B), 4(H), and 4(I) of the
Plan as may earlier terminate the option.
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(d) In no event shall this option give optionee (or his
successor) a right to acquire any greater number of shares than he had the right
to acquire on the date of his termination.
5. Adjustments on Recapitalization - The aggregate number of shares
of Common Class A Stock covered by this option, and the exercise price per
share, of set forth in this option shall be proportionately adjusted for any
increase or decrease in the number of issued shares of common stock of the
Company resulting from the subdivision or consolidation of common stock shares,
or the payment of a stock dividend after the date of grant of this Option, or
other increase in such common shares effected without receipt of consideration
by the Company (but there shall be no such proportional adjustment by virtue of,
or in connection with, the conversion of shares of Special Common Stock which
are presently issued and outstanding into shares of common stock of the
Company), provided, however, that any options to purchase fractional shares
resulting from any such adjustment shall be eliminated, and provided further
that any such adjustment shall be made in a manner so as not to constitute a
modification as defined in Section 425(h) (3) of the Code.
6. Adjustments on Reorganization - If the Company shall at any time
participate in a reorganization to which 425(a) of the Code applies and (a) the
Company is not the surviving entity, or (b) the Company is the surviving entity
and the shareholders of the Company's Common Stock or Common Class A Stock are
required to exchange their shares for property and/or securities, the Company
shall give each optionee written notice of such fact on or before fifteen (15)
days before such merger or consolidation, and each option shall be exercisable
in full after receipt of such notice and prior to such merger or consolidation;
however, options not exercised prior to such merger or consolidation shall
expire on the occurrence of such merger or consolidation. A sale of all or
substantially all the assets of the Company for a consideration (apart from
assumption of obligations) consisting primarily of securities shall be deemed a
merger or consolidation for the foregoing purposes. Notwithstanding the
foregoing, the provisions of this Paragraph 6 shall be subject to Section 4(B)
of the Plan.
7. Dissolution of Issuer of Option Stock - In the event of the
proposed dissolution or liquidation of the Company, the options granted
hereunder shall terminate as of a date to be fixed by the Committee, provided
that not less than thirty (30) days prior written notice of the date so fixed
shall be given to the optionee, and the optionee shall have the right, during
the period of thirty (30) days preceding such termination, to exercise his
option. Notwithstanding the foregoing, the provisions of this Paragraph 7 shall
be subject to Section 4(H) of the Plan if the optionee receives notice under
Section 4(H) at a time earlier than the notice provided herein.
8. Rights as a Shareholder - The optionee shall have no rights as a
shareholder with respect to any shares of Common Class A Stock of the Company
held under option until the date of issuance of the stock certificate to him for
such shares. Except as provided in Section 4(G) of the Plan, no adjustment shall
be made for dividends (if any are applicable to the Common Class A Stock) or
other applicable rights for which the record date is prior to the date of such
issuance. The Common Class A Stock is non-voting, non-dividend bearing stock.
Shares of Special Common Stock have priority over the Common Class A Stock upon
liquidation of the Company.
9. Status of Options - Options granted pursuant to the Plan are
intended to qualify as Incentive Stock Options within the meaning of Section
422A of the Code, and the terms of the Plan
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and this option shall be so construed, provided, however that nothing in the
Plan or this Option shall be interpreted as a representation, guarantee or other
undertaking on the part of the Company that the options granted pursuant hereto
are, or will be, determined to be Incentive Stock Options, within the meaning of
Section 422A of the Code.
10. Shareholders Agreement - Upon exercise of any option granted
pursuant to this Agreement and prior to the issuance of any Common Class A Stock
pursuant to such exercise, the Optionee shall first enter into a Shareholders
Agreement with the Corporation in the form attached hereto as Exhibit 1.
11. Stock Legend - Certificate evidencing shares of the Company's
Common Class A Stock purchased upon the exercise of this Option shall be
endorsed with the legend as required under the Plan and the Shareholders
Agreement.
12. Subject to Plan - This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Compensation
Committee of the Board of Directors of the Company to make interpretations of
the Plan and of options granted thereunder, and of the Board of Directors of the
Company to alter, amend, suspend, or discontinue the Plan subject to the
limitation expressed in the Plan. In the event of any conflict between the
provisions of Paragraphs 2 through 12 hereof and the Plan, the Plan shall
govern. By acceptance hereof Optionee acknowledges receipt of a copy of the Plan
and recognizes and agrees that all determinations, interpretations, or other
actions respecting the Plan may be made by a majority of the Board of Directors
of the Company or of the Compensation Committee, and that determinations,
interpretations or other actions are final, conclusive, and binding upon all
parties, including Optionee. Such Board of Directors or Committee may accelerate
the time at which this Option may be exercised.
IN WITNESS WHEREOF, this Option Agreement is executed as of the
_____ day of _____________________, 19__.
ATLANTIC DATA SERVICES, INC.
By:__________________________________
The undersigned Optionee hereby accepts the benefits of the
foregoing Incentive Stock Option Agreement and agrees to comply with the terms
thereof.
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