Exhibit 99.4
OPTICAL TECHNOLOGY GROUP, INC.
Incentive Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
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1. Grant of Option.
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This agreement evidences the grant by Optical Technology Group, Inc,
d/b/a OTG Software, a Delaware corporation (the "Company") on [Date], to [Name],
an employee of the Company (the "Participant"), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company's 1998 Stock
Incentive Plan (the "Plan"), a total of [Grant] shares of common stock, $.01 par
value per share, of the Company ("Common Stock")(the "Shares") at [Price] per
Share. Unless earlier terminated pursuant to Section 3.3(d) of Participant's
Employment Agreement with the Company, or otherwise, this option shall expire on
[Date] (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
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This option will become exercisable ("vest") as to 50% of the original
number of Shares on [Date]; and the remaining 50% of the original number of
shares will vest on [Date]. This option shall expire upon, and will not be
exercisable after, the Final Exercise Date.
The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.
3. Exercise of Option.
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(a) Form of Exercise. Each election to exercise this option shall be in writing,
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signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant 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 fewer than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise
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provided in this Section 3, this option may not be exercised unless the
Participant, 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, officer or director of, or
consultant or advisor to, the Company or any parent or subsidiary of the
Company as defined in Section 424(e) or (f) of the Code an "Eligible
Participant").
(c) Termination of Relationship with the Company. If the Participant ceases to
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be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall
terminate three months after such cessation (but in no event after the
Final Exercise Date), provided that this option shall be exercisable only
to the extent that the Participant was entitled to exercise this option on
the date of such cessation. Notwithstanding the foregoing, if the
Participant, prior to the Final Exercise Date, violates the non-competition
or confidentiality provisions of any employment contract, confidentiality
and nondisclosure agreement or other agreement between the Participant and
the Company, the right to exercise this option shall terminate immediately
upon written notice to the Participant from the Company describing such
violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
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becomes disabled (within the meaning of Section 22(e)(3)of the Code) prior
to the Final Exercise Date while he or she is an Eligible Participant and
the Company has not terminated such relationship for "cause" as specified
in paragraph (e) below, this option shall be exercisable; within the period
of one year following the date of death or disability of the Participant by
the Participant, provided that this option shall be exercisable only to the
extent that this option was exercisable by the Participant on the date of
his or her death or disability, and further provided that this option shall
not be exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise Date,
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is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of
such discharge. "Cause" shall have the meaning ascribed to it in the
Employment Agreement between Participant and the Company.
4. Right of First Refusal.
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(a) If the Participant proposes to sell, assign, transfer, pledge, hypothecate
or otherwise dispose of, by operation of law or otherwise (collectively,
"transfer") any Shares acquired upon exercise of this option, then the
Participant shall first give written notice of the proposed transfer (the
"Transfer Notice") to the Company. The Transfer Notice shall name the
proposed transferee and state the number of such Shares the Participant
proposes to transfer (the "Offered Shares"), the price per share and all
other material terms and conditions of the transfer.
(b) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the
Offered Shares at the price and upon the terms set forth in the Transfer
Notice. In the event the Company elects to purchase all of the Offered
Shares, it shall give written notice of such election to the Participant
within such 30-day period. Within 10 days after his receipt of such notice,
the Participant shall tender to the Company at its principal offices the
certificate or certificates representing the Offered Shares, duly endorsed
in blank by
the Participant or with duly endorsed stock powers attached thereto, all in
a form suitable for transfer of the Offered Shares to the Company. Upon
receipt of such certificate or certificates, the Company shall deliver or
mail to the Participant a check in payment of the purchase price for the
Offered Shares; provided that if the terms of payment set forth in the
Transfer Notice were other than cash against delivery, the Company may pay
for the Offered Shares on the same terms and conditions as were set forth
in the Transfer Notice.
(c) At and after the time at which the Offered Shares are required to be
delivered to the Company for transfer to the Company pursuant to subsection
(b) above, the Company shall not pay any dividend to the Participant on
account of such Shares or permit the Participant to exercise any of the
privileges or rights of a stockholder with respect to such Offered Shares,
but shall, in so far as permitted by law, treat the Company as the owner of
such Offered Shares.
(d) If the Company does not elect to acquire all of the Offered Shares, the
Participant may, within the 30-day period following the expiration of the
option granted to the Company under subsection (b) above, transfer the
Offered Shares to the proposed transferee, provided that such transfer
shall not be on terms and conditions more favorable to the transferee than
those contained in the Transfer Notice. Notwithstanding any of the above,
all Offered Shares transferred pursuant to this Section 4, shall remain
subject to the right of first refusal set forth in this Section 4 and such
transferee shall, as a condition to such transfer, deliver to the Company a
written instrument confirming that such transferee shall be bound by all of
the terms and conditions of this Section 4.
(e) The following transactions shall be exempt from the provisions of this
Section 4: (i) any transfer of Shares to or for the benefit of any spouse,
child or grandchild of the Participant, or to a trust for their benefit;
(ii) any transfer pursuant to an effective registration statement filed by
the Company under the Securities Act of 1933, as amended (the "Securities
Act"); and (iii) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company; provided, however, that
in the case of a transfer pursuant to clause (li) above, such Shares shall
remain subject to the right of first refusal set forth in this Section 4
and such transferee shall, as a condition to such transfer, deliver to the
Company a written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Section 4.
(f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 4 to one or more persons or
entities.
(g) The provisions of this Section 4 shall terminate upon the earlier of the
following events:
(1) the closing of the sale of shares of Common Stock in an underwritten
public offering pursuant to an effective registration statement filed
by the Company under the Securities Act; or
(2) the sale of all or substantially all of the capital stock, assets or
business of the Company, by merger, consolidation, sale of assets
otherwise.
(h) The Company shall not be required (a) to transfer on its books any of the
Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Section 4, or (b) to treat as owner of such
Shares or to pay dividend to any transferee to whom any such Shares shall
have been so sold or transferred.
5. Agreement in Connection with Public Offering.
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The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration statement
under the Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, or
such shorter period as may be agreed upon by the underwriters, and (ii) to
execute any agreement reflecting clause (i) above as may be requested by the
Company or the managing underwriters at the time of such offering.
6. Withholding.
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No Shares will be issued pursuant to the exercise of this option
unless and until the Participant pays to the Company, or makes provision
satisfactory to the Company for payment of, any federal, state or local
withholding taxes required by law to be withheld in respect of the exercise of
this option.
7. Acceleration.
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The vesting of options granted hereunder shall accelerate with all
95,238 Share options becoming exercisable immediately upon a change in control
of the Company due to the sale of all or substantially all of the capital stock,
assets or business of the Company, by merger, sale of assets or otherwise.
8. Nontransferability of Option.
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This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Partcipant, either voluntarily or by operation of
law, except by will or the laws of descent and distibution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.
9. Disqualifying Disposition.
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If the Participant disposes of Shares acquired upon exercise of this
option within two years from the date of grant of the option or one year after
such Shares were acquired pursuant to exercise of this option, the Participant
shall notify the Company in writing of such disposition.
10. Provisions of the Plan.
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This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option
IN WITNESS WHEREOF, the Company has caused this option to be executed under its
corporate seal by its duly authorized officer. This option shall take effect as
a sealed instrument.
OPTICAL TECHNOLOGY GROUP, INC.
d/b/a OTG Software
By: ___________________________
Name: _________________________
Title: ________________________
Date: _________________________
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the term and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company's 1998 Stock Incentive Plan.
PARTICIPANT:
Signature: _______________________
Printed: _________________________
[If the Participant resides in a community property state, it is desirable to
have the Participant's spouse also accept the option by signature here. The
following are community property states: Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not formally a
community property state, it has laws governing the division of marital property
similar to community property states and it may be desirable to have a Wisconsin
Participant's spouse also accept the option. In addition, if the Company is
granting an option to a California Participant, it must comply with California
blue sky rules which require modification to this option.]
