INCENTIVE STOCK OPTION AGREEMENT E/SCRIPTION, INC.
Exhibit 4.2
E/SCRIPTION, INC.
AGREEMENT made as of the 30th day of June 2007, between E/SCRIPTION, INC. (the “Company”), a
Delaware corporation having a principal place of business in Needham, MA, and Employee Name of
Town, MA, 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 1999 Employee, Director and Consultant Stock Option 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 [ __ ], on the terms and conditions and subject to all the limitations set forth
herein 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 $15.47 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. Payment shall be made in accordance with Paragraph 7 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 of this
Agreement
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up to [ __ ] Shares | |
On the second anniversary of the date of this
Agreement
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an additional [ __ ] Shares |
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On the third anniversary of the date of this
Agreement
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an additional [ __ ] Shares | |
On the fourth anniversary of the date of this
Agreement
|
an additional [ __ ] Shares |
The foregoing rights are cumulative and are subject to the other terms and conditions of this
Agreement and the Plan.
4. TERM OF OPTION.
The Option shall terminate ten (10) years from the date of this Agreement or, if the Employee
owns as of the date hereof more than ten percent (10%) of the total combined voting power of all
classes of capital stock of the Company or an Affiliate, five (5) 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 (3) 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. 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.
Notwithstanding the foregoing, in the event of the Employee’s Disability or death within three
(3) months after the termination of employment, the Employee or the Employee’s Survivors may
exercise the Option within one (1) 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 as of such termination, 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 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 (1) 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 exercisable but not 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 of any additional rights to exercise the Option as would have accrued |
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had the Employee not become Disabled prior to the end of the accrual period which
next ends following the date of Disability. The proration shall be based upon the
number of days during the accrual 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 Participant’s Survivors within one (1) 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 exercisable but not 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 of any additional rights to exercise the Option as would have accrued had the Employee not died prior to the end of the accrual period which next ends following the date of death. The proration shall be based upon the number of days during the accrual period prior to the Employee’s 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 at its principal executive office, 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 7 of the Plan. The
Company shall deliver a certificate or certificates representing 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 certificate or certificates for the Shares as to which the Option shall have been so
exercised shall be registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by the 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 or persons exercising the Option. In the event the Option shall be exercised,
pursuant to Section 4 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 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
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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. 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.
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 appropriate 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:
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| (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 under any applicable law (including without limitation state securities or “blue sky” laws). |
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Employee pursuant to the exercise of the Option granted hereby
shall not be transferred by the Employee except as permitted in the Amended and Restated
Stockholders Agreement dated October 5, 2005 between the Company and its stockholders (the
“Stockholders Agreement”).
12.2 In the event of the Employee’s termination of employment for any reason, the disposition
of the Shares issued pursuant to this Agreement, as well as the Employee’s and the Company’s rights
and obligations with respect to such Shares, shall be governed by the Stockholders Agreement.
12.3 Upon acquiring any Shares pursuant to the exercise of the Option, the Employee agrees to
become a party to the Stockholders Agreement.
12.4 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate upon the effective date of
the registration of the Shares pursuant to the Securities Exchange Act of 1934.
12.5 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
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to make a public offering of its securities or to be acquired by or merged with or into
another firm or entity.
12.6 All certificates representing the Shares to be issued to the Employee pursuant to this
Agreement shall have endorsed thereon a legend substantially as follows: “The shares represented
by this certificate are subject to restrictions set forth in an Incentive Stock Option Agreement
dated June 30th, 2007 with this Company, a copy of which Agreement is available for inspection at
the offices of the Company or will be made available upon request.”
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.
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.
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:
| Xxxx Xxxxxxx
|
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| eScription |
| 000 Xxxxx Xxxxxx
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| Xxxxxxx, XX 00000 |
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If to the Employee:
First, Last
Address
Town, MA Zip
Address
Town, MA Zip
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.
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 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.
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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.
| E/SCRIPTION, INC. |
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| By: | ||||
| eScription, Inc. | ||||
| CEO | ||||
Exhibit A
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NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[Form For Unregistered Shares]
To: eScription, Inc.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase shares (the “Shares”) of
the common stock, $.001 par value, of eScription, 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 .
I am aware that the Shares have not been registered under the Securities Act of 1933, as
amended (the “1933 Act”), or any state securities laws. I understand that the reliance by the
Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the
statements by me in this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all information which I
deem necessary to evaluate the merits and risks of the purchase of the Shares; (2) I have had the
opportunity to ask questions concerning the Shares and the Company and all questions posed have
been answered to my satisfaction; (3) I have been given the opportunity to obtain any additional
information I deem necessary to verify the accuracy of any information obtained concerning the
Shares and the Company; and (4) I have such knowledge and experience in financial and business
matters that I am able to evaluate the merits and risks of purchasing the Shares and to make an
informed investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my own personal account for
investment and not with a view to the sale or distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the 1933 Act, I must
continue to bear the economic risk of the investment for an indefinite time and the Shares cannot
be sold unless the Shares are subsequently registered under applicable federal and state securities
laws or an exemption from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose of all or any part of
the Shares unless (1) there is an effective registration statement under the 1933 Act and
applicable state securities laws covering any such transaction involving the Shares or (2) the
Company receives an opinion of my legal counsel (concurred in by legal counsel for the Company)
stating that such transaction is exempt from registration or the Company otherwise satisfies itself
that such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares stating that the Shares
have not been registered and setting forth the restriction on transfer contemplated hereby and to
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the placing of a stop transfer order on the books of the Company and with any transfer agents
against the Shares until the Shares may be legally resold or distributed without restriction.
I understand that at the present time Rule 144 of the Securities and Exchange Commission (the
“SEC”) may not be relied on for the resale or distribution of the Shares by me. I understand that
the Company has no obligation to me to register the sale of the Shares with the SEC and has not
represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the Shares set forth in the
1999 Employee, Director and Consultant Stock Option Plan and the Incentive Stock Option Agreement,
both of which I have carefully reviewed. I consent to the placing of a legend on my certificate
for the Shares referring to such restriction and the placing of stop transfer orders until the
Shares may be transferred in accordance with the terms of such restrictions.
I have considered the Federal, state and local income tax implications of the exercise of my
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 stock certificate for the Shares (check one):
o to me; or
o to me and , as joint tenants with right of survivorship
and mail the certificate to me at the following address:
My mailing address for shareholder communications, if different from the address listed above
is:
| Very truly yours, | ||||
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| Social Security Number |
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Exhibit A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[Form For Registered Shares]
TO: eScription, 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 eScription, 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 , 1999.
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 stock certificate for the Shares (check one):
o
to me; or
o
to me and
, as joint tenants with right of
survivorship,
and mail the certificate to me at the following address:
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My mailing address for shareholder communications, if different from the address listed above,
is:
| Very truly yours, | ||||
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