INTERACT SYSTEMS, INCORPORATED
1997 LONG-TERM INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the 'Option Agreement') dated the
___ day of __________, 199__ by and between Inter Act Systems, Incorporated, a
North Carolina corporation (the 'Company'), and ___________________, a key
employee of the Company (the 'Optionee'):
W I T N E S S E T H:
WHEREAS, the Company desires to provide the Optionee with an incentive to
accept employment with the Company and an opportunity to acquire common stock of
the Company so that the Optionee may have a proprietary interest in the success
of the Company; and
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Inter Act Systems, Incorporated 1997 Long-Term Incentive Plan
(the 'Plan'), a copy of which is attached hereto and incorporated by reference,
and the Optionee desires to accept such option in accordance with the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
1. Grant of Option. Subject to the terms and conditions of this Agreement,
the Company hereby grants to the Optionee an option (the 'Option') to purchase
all or any portion of _________________ (______) shares of the Company's Common
Stock (the 'Common Stock') at an exercise price of ________________ Dollars
($______) per share (the 'Exercise Price'). This Option is intended to be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the 'Code').
2. Term of Option. Subject to the further limitations and restrictions as
provided in the Plan and this Agreement, the Option shall become exercisable in
installments, with the Optionee having the right to purchase from the Company
the following number of shares of Common Stock of the Company subject to this
Option, on and after the following dates, in cumulative fashion:
(a) At any time after one year from the date hereof, and prior to
termination of this Option, up to twenty percent (20%) of the total number
of shares subject to this Option;
(b) At any time after two years from the date hereof, and prior to
termination of this Option, up to forty percent (40%) of the total number
of shares subject to this Option (less any shares previously purchased
pursuant to this Option);
(c) At any time after three years from the date hereof, and prior to
termination of this Option, up to sixty percent (60%) of the total number
of shares subject to this Option (less
any shares previously purchased pursuant to this Option);
(d) At any time after four years from the date hereof, and prior to
termination of this Option, up to eighty percent (80%) of the total number
of shares subject to this Option (less any shares previously purchased
pursuant to this Option); and
(e) At any time after five years from the date hereof, and prior to
the termination of this Option, this Option shall be exercisable in full.
Not less than 100 shares may be purchased at any one time pursuant to any
exercise of this Option unless the number of shares purchased is the total
number that may be purchased under this Option at that time or unless the
Company shall otherwise consent. No fractional shares of Common Stock shall be
issued upon any exercise of this Option.
3. Transferability of Option. The Option is not transferable by the
Optionee during the Optionee's lifetime but may be transferred only upon the
death of the Optionee by will or by the laws of descent and distribution.
4. Adjustments. The aggregate number of shares of Common Stock subject to
the Option and the Option exercise price shall be appropriately and equitably
adjusted to reflect any stock dividend, stock split, share combination or
recapitalization occurring subsequent to the date hereof, as further described
in Article 15 of Article I of the Plan.
5. Termination of Option. The Option shall terminate and be no longer
exercisable after the date which is ten years from the date hereof; provided,
however, that the Option shall sooner terminate as follows:
(a) If the Optionee's employment with the Company, its parent, or any
of its subsidiaries, or a corporation of a parent or subsidiary of such
corporation issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies (for purposes of this Section 5, the
Company, its parent, subsidiary or such other corporation collectively
referred to as the 'Company') is terminated for any reason other than
disability or death, then the Option or unexercised portion thereof shall
terminate on the date which is three months from the effective date of the
Optionee's termination of employment.
(b) If the Optionee's employment with the Company is terminated
because of his disability (within the meaning of Section 22(e)(3) of the
Code), then the Option or unexercised portion thereof shall terminate on
the date which is three months from the effective date of the Optionee's
termination of employment due to disability.
(c) If the Optionee's employment with the Company is terminated by
reason of death, then the Option or unexercised portion thereof shall
terminate
which is one year after the date of the Optionee's death. During this
period, the Option may be exercised by the person or persons to whom the
Optionee's rights under this Agreement shall pass by will or by the laws of
descent and distribution.
Any Option that may be exercised for a period following termination of the
Optionee's employment may be exercised only to the extent it was exercisable
immediately before such termination and in no event after the Option would
expire by its terms without regard to such termination.
6. Method of Exercise. The Option shall be exercised by the tender of
payment and delivery to the Company at its principal place of business of a
written notice, at least five (5) days prior to the proposed date of exercise,
which notice shall:
(a) state the election to exercise the Option, the number of shares of
Common Stock with respect to which the Option is being exercised, and the
name, address, and social security number of the person in whose name the
stock certificate or certificates for such shares of Common Stock is to be
registered.
(b) contain any such representations and agreements as to Optionee's
investment interest with respect to such shares of Common Stock as shall be
satisfactory to the Board or Committee.
(c) be signed by the person entitled to exercise the Option, and if
the Option is being exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to the Committee, of the
right of such person or persons to exercise the Option.
Payment of the exercise price may be made in cash or by certified, cashiers
or official check or, at the option of the Company, by personal check. Payment
may also be made by surrendering shares of Common Stock (including any shares of
Common Stock received upon a prior or simultaneous exercise of the Option) at
the then fair market value of such shares, as determined in accordance with
Section 7(b) of Article I of the Plan. Payment may also be made by combining
cash or check and shares of Common Stock.
After receipt of such notice in a form satisfactory to the Committee and
the acceptance of payment, the Company shall deliver to the Optionee a
certificate or certificates representing the shares purchased hereunder,
provided, that if any law or regulation requires the Company to take any action
with respect to the shares specified in such notice before the issuance thereof,
the date of delivery of such shares shall be extended for the period necessary
to take such action.
7. Tax Matters. The Optionee acknowledges that, upon exercise of the
Option, the Optionee will recognize taxable income generally in an amount equal
to the difference between the fair market value of the shares purchased upon
exercise and the
Exercise Price paid therefor, and the Company may have certain withholding
obligations for income and other taxes. It shall be a condition to the
Optionee's exercise of the Option and receipt of a stock certificate covering
Shares purchased pursuant to the Option that the Optionee pay to the Company
such amounts as it is required to withhold or, with the consent of the Company,
that the Optionee otherwise provide for the satisfaction of the Company's
withholding obligation. If any such payment is not made by the Optionee, the
Company may deduct the amounts required to be withheld from payments of any kind
to which the Optionee would otherwise be entitled from the Company.
8. Rights of a Shareholder. The Optionee shall not be deemed for any
purpose to be a shareholder of the Company with respect to any shares covered by
this Option unless this Option shall have been exercised and the Exercise Price
paid in the manner provided herein. No adjustment will be made for dividends or
other rights where the record date is prior to the date of exercise and payment.
Upon the exercise of the Option and the issuance of the certificate or
certificates evidencing the shares of Common Stock received, except as otherwise
provided herein, the Optionee shall have all the rights of a stockholder of the
Company including the rights to receive all dividends or other distributions
paid or made with respect to such shares.
9. Compliance with Securities Laws. The Optionee recognizes that any
registration of the shares of Common Stock issuable pursuant to this Option
under applicable federal and state securities laws, or actions to qualify for
applicable exemptions from such registrations, shall be at the option of the
Company. The Optionee acknowledges that, in the event that no such registrations
are undertaken and the Company relies on exemptions from such registrations, the
shares shall be issued only if the Optionee qualifies to receive such shares in
accordance with the exemptions from registration on which the Company relies and
that, in connection with any issuance of certificates evidencing such shares,
the Board of Directors may require appropriate representations from the Optionee
and take such other action as the Board of Directors may deem necessary,
including but not limited to placing restrictive legends on such certificates
and placing stop transfer instructions in the Company's stock transfer records,
or delivering such instructions to the Company's transfer agent, in order to
assure compliance with any such exemptions. Notwithstanding any other provision
of the Plan or this Agreement (i) no shares will be issued upon any exercise of
the Option unless and until such shares have been registered under all
applicable federal and state securities laws or unless, in the opinion of
counsel satisfactory to the Company, all actions necessary to qualify for
exemptions from such registrations shall have been taken and (ii) the Company
shall have no obligation to undertake such registrations or such actions
necessary to qualify for exemptions from registrations and shall have no
liability whatsoever for not doing so except to refund any option price tendered
to the Company.
10. Shareholders' Agreement. The Optionee understands and agrees that the
shares of Common Stock issuable upon exercise of this Option shall also be
subject to the restrictions on transfer and other provisions of the
shareholders' agreement, if any, that may be in effect among the Company and all
its shareholders as of the date of any
exercise of this Option. As a condition to the exercise of this Option, the
Optionee agrees that he will become a party to any such shareholders' agreement
by executing a joinder agreement or other appropriate document. In the event
that the Shareholders' Agreement dated as of April 16, 1993, as amended by
Amendment No. 1 thereto dated as of June 17, 1994, has terminated as a result of
a public offering of capital stock of the Company prior to the exercise of this
Option, the Optionee nevertheless agrees to be bound by the lock-up agreement
contained in Section 23 thereof or any similar lock-up agreement then in effect
with respect to the Company's shareholders.
11. Legends. The certificate or certificates evidencing all or any of the
shares of Common Stock issued upon exercise of this Option shall bear
substantially the following legend:
'The shares evidenced by this certificate have not
been registered under the Securities Act of 1933,
as amended, or under the securities laws of any
state. The shares may not be sold, transferred,
pledged or hypothecated in the absence of any
effective registration statement under the
Securities Act of 1933, as amended, and such
registration or qualification as may be necessary
under the securities laws of any state, or an
opinion of counsel satisfactory to the Company
that such registration or qualification is not
required.'
and shall also bear any legend required by the Shareholders' Agreement.
12. Specific Performance. The Optionee agrees that in the event of any
violation of this Agreement, an action may be commenced by the Company for any
such preliminary and permanent injunction relief and other equitable relief in
any court of competent jurisdiction in the State of North Carolina or in any
other court of competent jurisdiction. The Optionee hereby waives any objections
on the grounds of improper jurisdiction or venue to the commencement of an
action in the State of North Carolina and agrees that effective service of
process may be made upon him by mail under the notice provisions contained in
Section 16 hereof.
13. Construction. Whenever the word 'Optionee' is used in any provision of
this Agreement under circumstances where the provision should logically be
construed to apply to (i) the estate, personal representative, or beneficiary to
whom this Option may be transferred by will or by the laws of descent and
distribution or (ii) the guardian or legal representative of the Optionee acting
pursuant to a valid power of attorney or the decree of a court of competent
jurisdiction, then the term 'Optionee' shall be construed to include such
estate, personal representative, beneficiary, guardian or legal representative.
14. Severability. The provisions of this Agreement shall be severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereto.
15. Successor and Assigns. The terms of this Agreement shall be binding
upon and shall enure to the benefit of any successors or assigns of the Company
and of the Optionee and of the Common Stock issued or issuable upon the exercise
hereof.
16. Notices. Notices under this Agreement shall be in writing and shall be
deemed to have been duly given (i) when personally delivered, (ii) when
forwarded by Federal Express, Airborne, or another private carrier which
maintains records showing delivery information, (iii) when sent via facsimile
but only if a written facsimile acknowledgment of receipt is received by the
sending party, or (iv) when placed in the United States Mail and forwarded by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the party to whom such notice is being given.
17. Modification. This Agreement is the entire agreement and understanding
of the parties hereto with respect to the Option granted herein and supersedes
any and all prior and contemporaneous negotiations, understandings and
agreements with regard to the Option and the matters set forth herein, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validity executed by the parties hereto.
18. Governing Law. This Agreement shall be governed in accordance with the
laws of the State of North Carolina.
19. Multiple Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the Optionee has executed this Agreement and the
Company has caused this Agreement to be executed on its behalf by its duly
authorized officer effective as of the day and year first above written.
INTERACT SYSTEMS, INCORPORATED
ATTEST:
By:
Title:
----------------------------------
Secretary
(Corporate Seal)
WITNESS: OPTIONEE:
-----------------------------------
(SEAL)
Name: -----------------------------------
