Optionee: [NAME]
STARMET CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option. Starmet Corporation, a Massachusetts corporation,
whose principal place of business is at 0000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000 (the "Company"), hereby grants to [NAME OF OPTIONEE], an individual whose
address is set forth below the optionee signature line (the "Optionee"), an
option, pursuant to the Company's 1998 Stock Plan (the "Plan"), to purchase an
aggregate of [NUMBER OF SHARES] shares of common stock, $.10 par value per
share, of the Company ("Common Stock") at a price of $[EXERCISE PRICE] per
share, purchasable as set forth in and subject to the terms and conditions of
this option agreement (this "Agreement") and the Plan. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code"). The Plan has been approved by the stockholders of the Company. No
rights and obligations of the parties pursuant to this Agreement shall conflict
with such stockholder approval.
2. Incentive Stock Option. This option is intended to qualify as an
incentive stock option ("Incentive Stock Option") within the meaning of Section
422 of the Code. Any provision of this Agreement or the Plan which conflicts
with the requirements of qualification as an Incentive Stock Option under the
Code is null and void to the extent of such conflict and any ambiguities shall
be resolved so that this option qualifies as an Incentive Stock Option.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this
Agreement, this option may be exercised as to one-third (1/3rd) of the total
number of shares from and after one year from the date of grant, as to
two-thirds (2/3rds) of the total number of shares from and after two years from
the date of grant, and as to the whole number of shares from and after three
years from the date of grant and prior to the tenth anniversary of the date of
grant (hereinafter the "Expiration Date").
(b) Exercise Procedure. Subject to the conditions set forth in
this Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Company, specifying the number of shares to be
purchased and the purchase price to be paid therefor and accompanied by payment
in full in accordance with Section 4. Such exercise shall be effective upon
receipt by the Company of such written notice together with the required
payment. The Optionee may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share or for less than one whole share.
(c) Continuous Employment Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Optionee, at the time he or she exercises this option, is, and has been at all
times since the date of grant of this option, an employee of the Company. For
all purposes of this option, (i) "employment" shall be defined in accordance
with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any
successor regulations, and (ii) if this option shall be assumed or a new option
substituted therefor in a transaction to which Section 424(a) of the Code
applies, employment by such assuming or substituting corporation (hereinafter
called the "Successor Corporation") shall be considered for all purposes of this
option to be employment by the Company.
(d) Exercise Period Upon Termination of Employment. If the
Optionee ceases to be employed by the Company for any reason, then, except as
provided in paragraphs (e) and (f) below, the right to exercise this option
shall terminate three months after such cessation (but in no event after the
Expiration Date), provided that this option shall be exercisable only to the
extent that the Optionee was entitled to exercise this option on the date of
such cessation. Notwithstanding the foregoing, if the Optionee, prior to the
Expiration Date, materially violates any non-competition or confidentiality
provisions of any agreement between the Optionee and the Company, the right to
exercise this option shall terminate immediately upon such violation.
(e) Exercise Period Upon Death or Disability. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an employee of the Company, or
if the Optionee dies within three months after the Optionee ceases to be an
employee of the Company (other than as the result of a discharge for "cause" as
specified in paragraph (f) below), this option shall be exercisable, within the
period of one year following the date of death or disability of the Optionee
(but in no event after the Expiration Date), by the Optionee or by the person to
whom this option is transferred by will or the laws of descent and distribution,
provided that this option shall be exercisable only to the extent that this
option was exercisable by the Optionee on the date of his or her death or
disability. Except as otherwise indicated by the context, the term "Optionee",
as used in this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest or
inheritance or otherwise by reason of the death of the Optionee.
(f) Discharge for Cause. If the Optionee, prior to the
Expiration Date, ceases his or her employment with the Company because he or she
is discharged for "Cause" (as defined below), the right to exercise this option
shall terminate immediately upon such cessation of employment. "Cause" is
conduct, as determined by the Board of Directors, involving one or more of the
following: (i) gross misconduct by the optionee which is materially injurious to
the Company; or (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of the Company which results in
material economic loss, damage or injury to the Company; or (iii) the
unauthorized disclosure of any trade secret or confidential information of the
Company or any third party who has a business
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relationship with the Company or the violation of any noncompetition covenant or
assignment of inventions obligation with the Company; or (iv) the commission of
any act which induces any customer or prospective customer of the Company to
break a contract with the Company or to decline to do business with the Company;
or (v) the conviction of the optionee of a felony involving any financial
impropriety or which would materially interfere with the optionee's ability to
perform his or her services for the Company or otherwise be injurious to the
Company; or (vi) the failure of the optionee to perform in a material respect
his or her employment obligations without proper cause. In making such
determination, the Board of Directors shall act fairly and in utmost good faith.
For the purposes of this subsection (f), termination of employment shall be
deemed to occur when the optionee receives notice that his or her employment is
terminated.
4. Payment of Purchase Price.
(a) Method of Payment. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by delivery to
the Company of cash or a certified or bank check to the order of the Company in
an amount equal to the purchase price of such shares, (ii) subject to the
consent of the Company, by delivery to the Company of shares of Common Stock of
the Company then owned by the Optionee having a fair market value equal in
amount to the purchase price of such shares, (iii) subject to the consent of the
Company, by the delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon exercise of this
option and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be at the Optionee's direction at the time of
exercise, (iv) by any other means (including, without limitation, by delivery of
a promissory note of the Optionee payable on such terms as are specified by the
Board of Directors) which the Board of Directors determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 under the Securities Exchange
Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v)
by any combination of such methods of payment.
(b) Valuation of Shares or Other Non-Cash Consideration
Tendered in Payment of Purchase Price. For the purposes hereof, unless a
recognized market value is available, the fair market value of any share of the
Company's Common Stock or other non-cash consideration which may be delivered to
the Company in exercise of this option shall be determined in good faith by the
Board of Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase Price.
If the Optionee exercises this option by delivery of shares of Common Stock of
the Company, the certificate or certificates representing the shares of Common
Stock of the Company to be delivered shall be duly executed in blank by the
Optionee or shall be accompanied by a stock power duly executed in blank
suitable for purposes of transferring such shares to the
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Company. Fractional shares of Common Stock of the Company will not be accepted
in payment of the purchase price of shares acquired upon exercise of this
option.
(d) Restrictions on Use of Option Stock. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in payment
of the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
5. Delivery of Shares; Compliance With Securities Laws, Etc.
(a) General. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee; provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.
(b) Listing, Qualification, Etc. This option shall be subject
to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process except that this option may
be transferred as provided in paragraph (e) of Section 3 above. Upon any attempt
to transfer, assign, pledge, hypothecate or otherwise dispose of this option or
of such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon this option or such rights, this option and
such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of the Optionee for the period
within which this option may be exercised, or for any other period.
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8. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions
(a) General. If, through, or as a result of, any
merger, consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, the Optionee shall, with respect to this option or
any unexercised portion hereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 15(a) of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments
under this Section 9 will be made by the Board of Directors, whose determination
as to what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive. No fractional shares will be issued pursuant to
this option on account of any such adjustments.
(c) Limits on Adjustments. No adjustment shall be made
under this Section 9 which would, within the meaning of any applicable provision
of the Code, constitute a modification, extension or renewal of this option or a
grant of additional benefits to the Optionee.
10. Mergers, Consolidation, Distributions, Liquidations Etc. In
the event of a consolidation or merger or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity, or in the event of a liquidation of the Company, prior to the
Expiration Date or termination of this option, the Optionee shall, with respect
to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 16 of the
Plan.
Notwithstanding any other provision of this Agreement,
this option shall not be accelerated or exercisable, if, but only to the extent
that, such acceleration or exercise would, taking into account any other
consideration to be received by the Optionee from the Company, cause the
Optionee to be in receipt of an excess parachute payment as defined in Section
280G of the Code.
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11. Withholding Taxes. The Company's obligation to deliver shares
of Common Stock upon the exercise of this option shall be subject to the
Optionee's satisfaction of all applicable federal, state, local and foreign
taxes of any kind required by law to be withheld with respect to any shares
issued upon exercise of this option. If the Company, in its discretion,
determines that it must or should withhold or pay over tax with respect to the
exercise of this option or a Disqualifying Disposition (as defined in Section 12
below) of shares of Common Stock acquired by the Optionee on exercise of this
option, the Optionee hereby agrees that, at the option of the Company, Optionee
will pay to the Company or the Company may withhold from the Optionee's wages
the appropriate amount of federal, state, local and foreign taxes attributable
to such Disqualifying Disposition. If any portion of this option is treated as a
non-qualified option, the Optionee hereby agrees that, at the option of the
Company, Optionee will pay to the Company or the Company may withhold from the
Optionee's wages the appropriate amount of federal, state, local and foreign
taxes attributable to the Optionee's exercise of such non-qualified option. At
the Company's discretion, the amount required to be withheld may be withheld in
cash from such wages, or (with respect to compensation income attributable to
the exercise of this option) in kind from the Common Stock otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company does not withhold an amount from the Optionee's wages sufficient to
satisfy the Company's withholding obligation, the Optionee will reimburse the
Company on demand, in cash, for the amount under withheld.
12. Disqualifying Disposition. Although the parties intend that
this option shall qualify as an Incentive Stock Option, if this option is
determined not to be an Incentive Stock Option, the Optionee understands that
the Company is not responsible to compensate the Optionee or otherwise make up
for the treatment of this option as a non-qualified stock option. The Optionee
should consult with the Optionee's own tax advisors regarding the tax effects of
this option and the requirements necessary to obtain favorable treatment under
the Code, including, but not limited to, holding period requirements. The
Optionee agrees to notify the Company in writing immediately after the Optionee
makes a Disqualifying Disposition of any shares of Common Stock acquired
pursuant to the exercise of this option. Generally, a Disqualifying Disposition
is any disposition (whether by sale, exchange, gift, transfer, or otherwise) of
such shares before the later of (a) two years after the date the Optionee was
granted this option or (b) one year after the date the Optionee acquired shares
by exercising this option. If the Optionee dies before such shares are sold,
these holding period requirements do not apply and no Disqualifying Disposition
would occur. The Optionee also agrees to provide the Company with any
information which it shall request concerning any such disposition. The Optionee
acknowledges that he or she will forfeit the favorable income tax treatment
otherwise available with respect to the exercise of this Incentive Stock Option
if he or she makes a Disqualifying Disposition of the shares acquired on
exercise of this option.
13. Limitations on Certain Dispositions. The Optionee agrees, by
accepting this option, that if the Company offers any of its Common Stock for
sale pursuant to a registration statement under the Securities Act, the Optionee
will not, directly or indirectly, without the prior written consent of the
Company, sell, offer or agree to sell, grant any option to purchase or
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otherwise transfer or dispose of any shares of Common Stock purchased upon
exercise of this option for a period of 180 days after the effective date of
such registration statement.
14. Interpretation of this Agreement. All decisions and
interpretations made by the Committee or the Board of Directors, with regard to
any question arising under the Plan or this Agreement shall be binding and
conclusive on the Company and the Optionee and any other person entitled to
exercise this option as provided herein. In the event there is any inconsistency
between the provisions of this Agreement and of the Plan, the provisions of the
Plan shall govern, subject to the provisions of section 2 above.
15. Miscellaneous
(a) Except as provided herein, this option may not be
amended or otherwise modified unless evidenced in writing and signed by the
Company and the Optionee.
(b) All notices under this option shall be mailed or
delivered by hand to the parties
at their respective addresses set forth beneath their names below or at such
other address as may be designated in writing by either of the parties to one
another.
(c) This option shall be governed by and construed in
accordance with the laws of The
Commonwealth of Massachusetts.
Date of Grant:
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STARMET CORPORATION
By:
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Xxxxxx X. Xxxxx, President
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OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to
the terms and conditions thereof. The undersigned hereby acknowledges receipt of
a copy of the Company's 1998 Stock Plan.
OPTIONEE:
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[NAME OF OPTIONEE]
Address:
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