Exhibit (d)(2)
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the ____ day of _______, ____ (the "Grant
Date"), between Aldila, Inc., a Delaware corporation (the "Company"), and
________________ (the "Optionee").
WHEREAS, the Company has adopted the Aldila, Inc. 1994 Stock Incentive
Plan, as amended and restated (the "Plan") in order to provide additional
incentives to certain directors, officers and employees of the Company and
its Subsidiaries; and
WHEREAS, the Committee responsible for administration of the Plan has
determined to grant an option to the Optionee as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
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1.1 The Company hereby grants to the Optionee the right and
option (the "Option") to purchase all or any part of an aggregate of
_______ whole Shares subject to, and in accordance with, the terms and
conditions set forth in this Agreement.
1.2 The Option is intended to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code and shall be so
construed; provided, however, that nothing in this Agreement shall be
interpreted as a representation, guarantee or other undertaking on the part
of the Company that the Option is or will be determined to be an Incentive
Stock Option within the meaning of Section 422 of the Code.
1.3 This Agreement shall be construed in accordance and
consistent with, and subject to, the provisions of the Plan (the provisions
of which are incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in this Agreement
shall have the same definitions as set forth in the Plan.
2. Purchase Price.
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The price at which the Optionee shall be entitled to purchase Shares
upon the exercise of the Option shall be $_____ per Share.
3. Duration of Option.
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The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten (10) years from the Grant Date (the
"Exercise Term"); provided, however, that the Option may be earlier
terminated as provided in Section 6 hereof.
4. Exercisability of Option.
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Unless otherwise provided in this Agreement or the Plan, the Option
shall entitle the Optionee to purchase, in whole at any time or in part
from time to time, one-third of the total number of Shares covered by the
Option on or after the expiration of one (1) year from the Grant Date and
an additional one-third of the total number of Shares covered by the Option
on or after the expiration of each of the second and third anniversaries of
the Grant Date, and each such right of purchase shall be cumulative and
shall continue, unless sooner exercised or terminated as herein provided
during the remaining period of the Exercise Term.
5. Manner of Exercise and Payment.
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5.1 Subject to the terms and conditions of this Agreement and the
Plan, the Option may be exercised by delivery of written notice to the
Secretary of the Company, at its principal executive office. Such notice
shall state that the Optionee is electing to exercise the Option and the
number of Shares in respect of which the Option is being exercised and
shall be signed by the person or persons exercising the Option. If
requested by the Committee, such person or persons shall (i) deliver this
Agreement to the Secretary of the Company who shall endorse thereon a
notation of such exercise and (ii) provide satisfactory proof as to the
right of such person or persons to exercise the Option.
5.2 The notice of exercise described in Section 5.1 hereof shall
be accompanied by the full purchase price for the Shares in respect of
which the Option is being exercised, in cash, by check or by transferring
Shares to the Company having a Fair Market Value on the day preceding the
date of exercise equal to the cash amount for which such Shares are
substituted.
5.3 Upon receipt of notice of exercise and full payment for the
Shares in respect of which the Option is being exercised, the Company
shall, subject to the terms and conditions of the Plan, take such action as
may be necessary to effect the transfer to the Optionee of the number of
Shares as to which such exercise was effective.
5.4 The Optionee shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any Shares subject to
the Option until (i) the Option shall have been exercised pursuant to the
terms of this Agreement and the Optionee shall have paid the full purchase
price for the number of Shares in respect of which the Option was
exercised, (ii) the Company shall have issued and delivered the Shares to
the Optionee, and (iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company, whereupon the Optionee
shall have full voting and other ownership rights with respect to such
Shares.
6. Termination of Employment.
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6.1 Death, Disability, Retirement or Change in Control. If the
employment (or service as a director) of the Optionee is terminated as a
result of his death, Disability, Retirement, or within two (2) years
following a Change in Control, the Option shall continue to be exercisable
in whole or in part (to the extent exercisable on the date of the
Optionee's termination of employment (or service as a director)) or at any
time within one (1) year after the date of such termination of employment
(or service as a director), but in no event after the expiration of the
Exercise Term. In the event of the Optionee's death, the Option shall be
exercisable, to the extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal representatives or
distributees and such person or persons shall be substituted for the
Optionee each time the Optionee is referred to herein.
6.2 Other Termination of Employment. If the employment (or
service as a director) of the Optionee is terminated for any reason other
than the reasons set forth in Section 6.1 hereof (including the Optionee's
ceasing to be employed by a Subsidiary or Division as a result of the sale
of such Subsidiary or Division or an interest in such Subsidiary or
Division), the Option shall terminate on the earlier of the expiration of
the Exercise Term and the 30th day following the date of the Optionee's
termination of employment (or service as a director), whether or not
exercisable.
7. Effect of Change in Control.
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Notwithstanding anything contained in this Agreement to the contrary
(other than the last sentence of this Section 7), in the event of a Change
in Control, (A) the Option shall become immediately and fully exercisable
and (B) upon termination of the Optionee's employment (or service as a
director) with the Company following a Change in Control, the Option shall
remain exercisable until the later of (x) one year after termination and
(y) sixty (60) days following the expiration of the Pooling Period (in the
event the Change of Control constitutes a Pooling Transaction), but in no
event beyond the stated term of the Option. In addition, the Optionee will
be permitted to surrender for cancellation within sixty (60) days after
such Change in Control, the Option or portion of the Option, to the extent
not yet exercised, and the Optionee will be entitled to receive a cash
payment in an amount equal to the excess, if any, of (A) the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered, over (B) the aggregate
purchase price for such Shares under the Option; provided, however, if the
Option was granted within six (6) months prior to the Change in Control and
the Optionee may be subject to liability under Section 16(b) of the
Exchange Act, the Optionee shall be entitled to surrender the Option for
cancellation during the sixty (60) day period commencing upon the
expiration of six (6) months from the Grant Date. In the case of a Change
in Control which also constitutes a Pooling Transaction, the Board may take
such actions which it determines after consultation with its advisors that
are reasonably necessary in order to assure that the Pooling Transaction
will qualify as such, including, but not limited to, providing that (i) the
Option shall not become immediately and fully exercisable on the date of
the Change in Control but rather shall become immediately and fully
exersiable on the date following the last day of the Pooling Period
(whether or not the Optionee is then an employee of the Company), (ii) the
Optionee shall only have the right to surrender the Option (or any portion
of the Option) for cancellation in return for the payment specified above
in this Section 7 for a period of sixty (60) days commencing on the date
following the last day of the Pooling Period, but in no event beyond the
stated term of the Option, and/or (iii) the payment specified above in this
Section 7 shall be paid in the form of cash, Shares or securities of a
successor of the Company, or a combination of the foregoing.
8. Nontransferability.
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The Option shall not be transferable other than by will or by the laws
of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee.
9. No Right to Continued Employment.
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Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance
of employment by the Company, nor shall this Agreement or the Plan
interfere in any way with the right of the Company to terminate the
Optionee's employment at any time.
10. Adjustments.
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In the event of a Change in Capitalization, the Committee may make
appropriate adjustments to the number and class of Shares or other stock or
securities subject to the Option and the purchase price for such Shares or
other stock or securities. The Committee's adjustment shall be made in
accordance with the provisions of Section 12 of the Plan and shall be
effective and final, binding and conclusive for all purposes of the Plan
and this Agreement.
11. Effective on a Merger, Consolidation or Liquidation.
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Subject to Section 7 hereof, upon the effective date of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled to receive in
respect of all Shares subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash, property or other
consideration that each holder of Shares was entitled to receive in the
Transaction.
12. Disqualifying Dispositions.
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If the Optionee makes a disposition, within the meaning of Section
424(c) of the Code and the regulations promulgated thereunder, of any Share
or Shares issued to the Optionee pursuant to his exercise of the Option
within the two-year period commencing on the day after the grant date or
within the one-period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days after such disposition, notify the
Company thereof, by delivery of a written notice to the Secretary of the
Company, and immediately deliver to the Company the amount of all
applicable withholding taxes, if any, under Federal, state and local law.
13. Optionee Bound by the Plan.
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The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof.
14. Modification of Agreement.
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This Agreement may be modified, amended, suspended or terminated, and
any terms or conditions may be waived, but only by a written instrument
executed by the parties hereto.
15. Severability.
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Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
16. Governing Law.
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The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
17. Successors in Interest.
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This Agreement shall inure to the benefit of and be binding upon each
successor corporation. This Agreement shall inure to the benefit of the
Optionee's legal representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement shall be final,
binding and conclusive upon the Optionee's heirs, executors, administrators
and successors.
18. Resolution of Disputes.
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Any dispute or disagreement which may arise under, or as a result of,
or in any way relate to, the interpretation, construction or application of
this Agreement shall be determined by the Committee in good faith. Any
determination made hereunder shall be final, binding and conclusive on the
Optionee and Company for all purposes.
ALDILA, INC.
Attest:
BY:
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Secretary
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Optionee:
