NONTRANSFERABLE
INCENTIVE STOCK OPTION
AGREEMENT dated as of [ , ]
between Osteotech,
Inc., and [______________] (the "Optionee", which
term as used herein
shall be deemed to include any successor to the
Optionee by will or by
the laws of descent and distribution, unless
the context shall otherwise require.)
WHEREAS, pursuant to the Company's
1991 Stock Option Plan (the "1991 Plan")
the Board of Directors of the Company
approved the issuance to the Optionee,
effective as the date set forth above, of
an incentive option to
purchase up to
an aggregate of [ ] shares of Common Stock,
$.01 par value (the "Common Stock"),
of the Company at a price (the "Option
Price") of $[ ] per share, upon the terms
and conditions hereinafter stated.
NOW,
THEREFORE,
in consideration of the mutual
premises and undertakings
hereinafter set forth, the parties hereto
agree as follows:
1. Option;
Option Price. The Company hereby grants to the Optionee the
option (the "Option") to purchase,
subject to the terms
and conditions of this
Agreement, [_______] shares of Common Stock
at an exercise price per share equal
to the Option Price. The Option is qualified for
Federal income tax purposes as
an "incentive stock option" within the meaning of Section 422A
of the Internal
Revenue Code of 1986, as amended (the
"Code").
2. Term.
The term (the "Option
Term") of the Option
shall commence on the
date of this Agreement and shall expire at 5:00
p.m. local time at the location
of the Company's principal executive offices ("local time") on the tenth
anniversary of such date, unless the Option shall have been
terminated earlier
in accordance with the terms hereof:
3. Time of
Exercise. Unless accelerated in the discretion of the Company
or
as otherwise provided herein, the Option shall become exercisable as to a
specified percentage of the shares
subject thereto, determined based on the
period of continuous employment of the Optionee through the applicable date
below, as follows:
SHARES FOR WHICH OPTION IS EXERCISABLE
DATE
PERCENTAGE
NUMBER
[1st anniversary of grant date]
25%
[ ]
[2nd anniversary of grant date]
25%
[ ]
[3 rd anniversary of grant date]
25%
[ ]
[4th anniversary of grant date]
25%
[ ]
4. Termination
of Option. (a) The unexercised portion of the Option issued
under this Agreement shall automatically terminate and shall become null
and
void and be of no further force or effect upon the first to occur of the
following:
(i) the
expiration of the Option Term;
(ii)
The expiration of 12 months from the date of an Involuntary
Termination provided, however, that the Option may be
exercised only to the
extent that the Optionee had the right to
exercise such Option as of the date of
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termination of employment;
(iii) the
expiration of three
(3) months from the date of the termination
of the Optionee's employment by the Company or any
of its subsidiaries,
unless
such termination is an Involuntary
Termination or a
Termination of Association
provided, however, that the Option may be
exercised only to the extent that the
Optionee had the right to exercise such
Option as of the date of termination of
employment;
(iv) upon the
date of a Termination of Association;
(v) the
effective date of a corporate transaction as defined in Section
10
of the 1991 Plan to which Section 10 of the 1991 Plan
relating to
assumptions
and substitutions of Options does not apply; provided, however, that an
Optionee's right to exercise any Option
outstanding prior to such effective date
shall in all events be suspended
during the period
commencing 10 days
prior to
the proposed effective date of such corporate
transaction and ending
on either
the actual effective date of such corporate transaction or upon receipt of
notice from the Company that such corporate
transaction will not
in fact occur;
and
(vi)
except to the extent
permitted by Section 10 of the 1991 Plan,
the
date on which such Option or any part thereof or right or privilege relating
thereto is transferred (otherwise than by will or the laws of descent or
distribution), assigned, pledged, hypothecated,
attached or otherwise
disposed
of by the Optionee.
(b) As used in
this Agreement, the following definitions apply:
Termination for Exceptional Cause shall mean:
(i) the
Optionee's
willful misconduct with respect to the business and
affairs of the Company or any subsidiary
thereof;
(ii) the
Optionee's
gross neglect of duties or failure to act which
materially and adversely affects the business or affairs of
the Company or any
subsidiary thereof; or
(iii) the
Employee's commission
of an act involving
embezzlement or fraud
or conviction for any felony.
"Involuntary
Termination"
means a termination caused by death or total
disability, or by retirement.
"Termination of
Association" shall mean a Termination for Exceptional Cause
and/or a termination by the Company attributable to a material breath by the
Optionee of an agreement with the Company
or a subsidiary thereof. The Board of
Directors of the Company shall have the power to determine
what constitutes a
Termination of Association and the date upon which such Termination of
Association occurs. Any such determination shall be final, conclusive and
binding upon the Optionee.
(c) In the event
of the dissolution
or liquidation of the Company, or
reorganization, merger or consolidation in which the Company is not the
surviving company, a sale of all or substantially all of the assets of the
Company to another person or entity, or a transaction in which all of the
stockholders of the Company exchange their Common Stock for cash and/or
securities, the provisions of Section 10 of
the 1991 Plan (or similar successor
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provisions thereof) shall apply.
5. Procedure for Exercise. (a) The Option may be exercised,
in whole or
part (for the purchase of whole shares
only), by delivery of a written
notice
(the "Notice") from the Optionee to the Secretary
of the Company, which
Notice
shall:
(i) state that the
Optionee elects to exercise the Option;
(ii)
state the number of
shares with
respect to which the Optionee is
exercising the Option (the "Optioned
Shares");
(iii)
state the method of
payment for the
Optioned Shares pursuant to
Section 5(b);
(iv) in the
event that the Option
shall be exercised
by any person
other
than the Optionee pursuant to Section
4(a)(ii), include appropriate proof of the
right of such person to exercise the
option;
(v) state the
date upon which the Optionee desires to consummate the
purchase of the Optioned Shares (which date must be prior
to the termination of
the Option and within 30 days of the date
of delivery of the Notice); and
(vi)
include any representation of the Optionee required pursuant to
Section 8(b) hereof.
(b) Payment of
the Option Price for
the Optioned
Shares shall be made
in
cash or by personal or certified check.
(c) The Company
shall be entitled to
require as a condition of delivery of
the Optioned Shares that the Optionee remit
or, in appropriate
cases, agree to
remit when due, an amount in cash
sufficient to satisfy all current or estimated
future Federal, state and local withholding tax
and employment tax requirements
relating hereto.
(d) Within 30 days of the exercise of the Option, the Optionee shall
deliver to the Company a copy of any
election filed by the Optionee with the
Internal Revenue Service under Section
83(b) of the Code.
6. No Rights as
Stockholder;
No Rights to
Employment.
(a) The Optionee
shall not have any privileges of a stockholder of the Company with respect to
any Optio
