EXHIBIT 99.3
------------
INCENTIVE STOCK OPTION AGREEMENT
NATIONAL DATACOMPUTER, INC.
AGREEMENT made as of the ___ day of _______ 200_, between National
Datacomputer, Inc. (the "Company"), a Delaware corporation and ____________, an
employee of the Company (the "Employee").
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock, $.001 par value per share (the "Shares"),
under and for the purposes set forth in the Company's 2007 Employee, Director
and Consultant Stock Plan (the "Plan");
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION.
---------------
The Company hereby grants to the Employee the right and option to
purchase all or any part of an aggregate of ________________ Shares, on the
terms and conditions and subject to all the limitations set forth herein, under
United States securities and tax laws, and in the Plan, which is incorporated
herein by reference. The Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
--------------
The purchase price of the Shares covered by the Option shall be $____
per Share, subject to adjustment, as provided in the Plan, in the event of a
stock split, reverse stock split or other events affecting the holders of Shares
after the date hereof (the "Purchase Price"). Payment shall be made in
accordance with Paragraph 9 of the Plan.
3. EXERCISABILITY OF OPTION.
------------------------
Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:
On the first anniversary of the date up to _________ Shares
of this Agreement
On the second anniversary of the date an additional _________ Shares
of this Agreement
On the third anniversary of the date an additional _________ Shares
of this Agreement
On the fourth anniversary of the date an additional _________ Shares
of this Agreement
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
Notwithstanding the foregoing, in the event of a Change of Control (as
defined below), __% of the Shares which would have vested in each vesting
installment remaining under this Option will be vested for purposes of Section
24(B) of the Plan unless this Option has otherwise expired or been terminated
pursuant to its terms or the terms of the Plan.(1)
Change of Control means the occurrence of any of the following
events:
(i) Ownership. Any "Person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becomes the "Beneficial Owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the
total voting power represented by the Company's then
outstanding voting securities (excluding for this purpose
the Company or its Affiliates or any employee benefit plan
of the Company) pursuant to a transaction or a series of
related transactions which the Board of Directors does not
approve; or
(ii) Merger/Sale of Assets. A merger or consolidation of the
Company whether or not approved by the Board of Directors,
other than a merger or consolidation which would result in
the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity or the parent of such
corporation) at least 50% of the total voting power
represented by the voting securities of the Company or such
surviving entity or parent of such corporation outstanding
immediately after such merger or consolidation, or the
stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets; or
2
(iii) Change in Board Composition. A change in the composition of
the Board of Directors, as a result of which fewer than a
majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date the Plan was
approved by the directors, or (B) are elected, or nominated
for election, to the Board of Directors with the
affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but
shall not include an individual whose election or
nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the
Company).
4. TERM OF OPTION.
--------------
This Option shall terminate ten years from the date of this Agreement
or, if the Employee owns as of the date hereof more than 10% of the total
combined voting power of all classes of capital stock of the Company or an
Affiliate, five years from the date of this Agreement, but shall be subject to
earlier termination as provided herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination of the Employee's employment for "cause" (as defined in the Plan),
the Option may be exercised, if it has not previously terminated, within three
months after the date the Employee ceases to be an employee of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter except as set forth below. In such
event, the Option shall be exercisable only to the extent that the Option has
become exercisable and is in effect at the date of such cessation of employment.
If the Employee ceases to be an employee of the Company or of an
Affiliate but continues after termination of employment to provide service to
the Company or an Affiliate as a consultant, this Option shall continue to vest
in accordance with Section 3 above as if this Option had not terminated until
the Employee is no longer providing services to the Company. In such case, this
Option shall automatically convert and be deemed a Non-Qualified Option as of
the date that is three months from termination of the Employee's employment and
this Option shall continue on the same terms and conditions set forth herein
until such Employee is no longer providing service to the Company or an
Affiliate.
Notwithstanding the foregoing, in the event of the Employee's
Disability or death within three months after the termination of employment, the
Employee or the Employee's Survivors may exercise the Option within one year
after the date of the Employee's termination of employment, but in no event
after the date of expiration of the term of the Option.
In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease immediately as of the time
the Employee is notified his or her employment is terminated for "cause," and
this Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Employee's termination as an employee, but prior
to
3
the exercise of the Option, the Board of Directors of the Company determines
that, either prior or subsequent to the Employee's termination, the Employee
engaged in conduct which would constitute "cause," then the Employee shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one year after
the Employee's termination of employment or, if earlier, within the term
originally prescribed by the Option. In such event, the Option shall be
exercisable:
(a) to the extent that the Option has become exercisable but has not
been exercised as of the date of Disability; and
(b) in the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion through the date of Disability of
any additional vesting rights that would have accrued on the next
vesting date had the Employee not become Disabled. The proration
shall be based upon the number of days accrued in the current
vesting period prior to the date of Disability.
In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Employee's
Survivors within one year after the date of death of the Employee or, if
earlier, within the originally prescribed term of the Option. In such event, the
Option shall be exercisable:
(x) to the extent that the Option has become exercisable but has not
been exercised as of the date of death; and
(y) in the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion through the date of death of any
additional vesting rights that would have accrued on the next
vesting date had the Employee not died. The proration shall be
based upon the number of days accrued in the current vesting
period prior to the Employee's date of death.
5. METHOD OF EXERCISING OPTION.
---------------------------
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Company or its designee, in substantially
the form of Exhibit A attached hereto. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be signed
by the person exercising the Option. Payment of the purchase price for such
Shares shall be made in accordance with Paragraph 9 of the Plan. The Company
shall deliver such Shares as soon as practicable after the notice shall be
received, provided, however, that the Company may delay issuance of such Shares
until completion of any action or obtaining of any consent, which the Company
deems necessary under any applicable law (including, without limitation, state
securities or "blue sky" laws). The Shares as to which the Option shall have
been so exercised shall be registered in the Company's share register in the
name of the person so exercising the Option (or, if the Option shall be
exercised by the
4
Employee and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person exercising the Option. In the event the
Option shall be exercised, pursuant to Section 4 hereof, by any person other
than the Employee, such notice shall be accompanied by appropriate proof of the
right of such person to exercise the Option. All Shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
nonassessable.
6. PARTIAL EXERCISE.
----------------
Exercise of this Option to the extent above stated may be made in part
at any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY.
-----------------
The Option shall not be transferable by the Employee otherwise than by
will or by the laws of descent and distribution. The Option shall be
exercisable, during the Employee's lifetime, only by the Employee (or, in the
event of legal incapacity or incompetency, by the Employee's guardian or
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
---------------------------------------
The Employee shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Employee. Except as is expressly
provided in the Plan with 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 the date of such registration.
9. ADJUSTMENTS.
-----------
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; provided,
however, that in the event of a Change of Control (as defined in Section 3
above) ___% of the Shares which would have vested in each vesting installment
remaining under this Option will be vested for purposes of Section 24(B) of the
Plan.
5
10. TAXES.
-----
The Employee acknowledges that any income or other taxes due from him
or her with respect to this Option or the Shares issuable pursuant to this
Option shall be the Employee's responsibility.
In the event of a Disqualifying Disposition (as defined in Section 15
below) or if the Option is converted into a Non-Qualified Option and such
Non-Qualified Option is exercised, the Company may withhold from the Employee's
remuneration, if any, the minimum statutory amount of federal, state and local
withholding taxes attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Employee on exercise of
the Option. The Employee further agrees that, if the Company does not withhold
an amount from the Employee's remuneration sufficient to satisfy the Company's
income tax withholding obligation, the Employee will reimburse the Company on
demand, in cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT.
------------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933
Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the
certificate(s) evidencing the Shares issued pursuant to such
exercise:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws;" and
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the 1933 Act without
registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the
Company deems necessary
6
under any applicable law (including without limitation state
securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
----------------------------------
12.1 The Employee agrees that in the event the Company proposes to
offer for sale to the public any of its equity securities and such Employee is
requested by the Company and any underwriter engaged by the Company in
connection with such offering to sign an agreement restricting the sale or other
transfer of Shares, then it will promptly sign such agreement and will not
transfer, whether in privately negotiated transactions or to the public in open
market transactions or otherwise, any Shares or other securities of the Company
held by him or her during such period as is determined by the Company and the
underwriters, not to exceed 180 days following the closing of the offering, plus
such additional period of time as may be required to comply with Marketplace
Rule 2711 of the National Association of Securities Dealers, Inc. or similar
rules thereto (such period, the "Lock-Up Period"). Such agreement shall be in
writing and in form and substance reasonably satisfactory to the Company and
such underwriter and pursuant to customary and prevailing terms and conditions.
Notwithstanding whether the Employee has signed such an agreement, the Company
may impose stop-transfer instructions with respect to the Shares or other
securities of the Company subject to the foregoing restrictions until the end of
the Lock-Up Period.
12.2 The Employee acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Employee any material information regarding the business of the
Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Employee by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.
13. NO OBLIGATION TO EMPLOY.
------------------------
The Company is not by the Plan or this Option obligated to continue the
Employee as an employee of the Company or an Affiliate. The Employee
acknowledges: (i) that the Plan is discretionary in nature and may be suspended
or terminated by the Company at any time; (ii) that the grant of the Option is a
one-time benefit which does not create any contractual or other right to receive
future grants of options, or benefits in lieu of options; (iii) that all
determinations with respect to any such future grants, including, but not
limited to, the times when options shall be granted, the number of shares
subject to each option, the option price, and the time or times when each option
shall be exercisable, will be at the sole discretion of the Company; (iv) that
the Employee's participation in the Plan is voluntary; (v) that the value of the
Option is an extraordinary item of compensation which is outside the scope of
the Employee's employment contract, if any; and (vi) that the Option is not part
of normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments.
7
14. OPTION IS INTENDED TO BE AN ISO.
-------------------------------
The parties each intend that the Option be an ISO so that the Employee
(or the Employee's Survivors) may qualify for the favorable tax treatment
provided to holders of Options that meet the standards of Section 422 of the
Code. Any provision of this Agreement or the Plan which conflicts with the Code
so that this Option would not be deemed an ISO is null and void and any
ambiguities shall be resolved so that the Option qualifies as an ISO.
Nonetheless, if the Option is determined not to be an ISO, the Employee
understands that neither the Company nor any Affiliate is responsible to
compensate him or her or otherwise make up for the treatment of the Option as a
Non-Qualified Option and not as an ISO. The Employee should consult with the
Employee's own tax advisors regarding the tax effects of the Option and the
requirements necessary to obtain favorable tax treatment under Section 422 of
the Code, including, but not limited to, holding period requirements.
Notwithstanding the foregoing, to the extent that the Option is not
deemed to be an ISO pursuant to Section 422(d) of the Code because the aggregate
fair market value (determined as of the date hereof) of any of the Shares with
respect to which this ISO is granted becomes exercisable for the first time
during any calendar year in excess of $100,000, the portion of the Option
representing such excess value shall be treated as a Non-Qualified Option and
the Employee shall be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement.
15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------
The Employee agrees to notify the Company in writing immediately after
the Employee makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the Option. A Disqualifying Disposition is defined
in Section 424(c) of the Code and includes any disposition (including any sale)
of such Shares before the later of (a) two years after the date the Employee was
granted the Option or (b) one year after the date the Employee acquired Shares
by exercising the Option, except as otherwise provided in Section 424(c) of the
Code. If the Employee has died before the Shares are sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
16. NOTICES.
-------
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company: National Datacomputer, Inc.
000 Xxxxxxxxx Xxxxxxxx, Xxxxxxxx 0
Xxxxxxxxx, XX 00000
8
If to the Employee:
--------------------------------------------
--------------------------------------------
--------------------------------------------
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
17. GOVERNING LAW.
--------------
This Agreement shall be construed and enforced in accordance with the
law of the State of Delaware, without giving effect to the conflict of law
principles thereof. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction in the
Commonwealth of Massachusetts and agree that such litigation shall be conducted
in the courts of Middlesex County, Massachusetts or the federal courts of the
United States for the District of Massachusetts.
18. BENEFIT OF AGREEMENT.
---------------------
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
19. ENTIRE AGREEMENT.
-----------------
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
20. MODIFICATIONS AND AMENDMENTS.
-----------------------------
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
21. WAIVERS AND CONSENTS.
---------------------
Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions
9
of this Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
22. DATA PRIVACY.
-------------
By entering into this Agreement, the Employee: (i) authorizes the
Company and each Affiliate, and any agent of the Company or any Affiliate
administering the Plan or providing Plan recordkeeping services, to disclose to
the Company or any of its Affiliates such information and data as the Company or
any such Affiliate shall request in order to facilitate the grant of options and
the administration of the Plan; (ii) waives any data privacy rights he or she
may have with respect to such information; and (iii) authorizes the Company and
each Affiliate to store and transmit such information in electronic form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto
set his or her hand, all as of the day and year first above written.
National Datacomputer, Inc.
By:___________________________________
Name
Title
______________________________________
Employee
11
Exhibit A
---------
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
TO: National Datacomputer, Inc.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase _________
shares (the "Shares") of the common stock, $.001 par value, of National
Datacomputer, Inc. (the "Company"), at the exercise price of $________ per
share, pursuant to and subject to the terms of that certain Incentive Stock
Option Agreement between the undersigned and the Company dated _______________,
200_.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
--------------------------------------------------------------------------------
Please issue the Shares (check one):
[_] to me; or
[_] to me and ___________________________, as joint tenants with right
of survivorship,
at the following address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
B-1
My mailing address for shareholder communications, if different from
the address listed above, is:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Very truly yours,
--------------------------------------
Employee (signature)
--------------------------------------
Print Name
--------------------------------------
Date
--------------------------------------
Social Security Number
B-2
