Exhibit 10.1

 

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Keane, Inc.

 

 

Incentive Stock Option Agreement

Granted Under 1998 Stock Incentive Plan

 

1.                                       Grant of Option.

 

This agreement evidences the grant by Keane, Inc., a Massachusetts corporation
(the “Company”), on             ,      (the “Grant Date”) to
                               (the “Participant”), an employee of the Company
or one of its wholly-owned subsidiaries, as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended and any regulations promulgated
thereunder (the”Code”), 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           shares of common stock, $.10 par value per share,
of the Company (“Common Stock”) (the “Shares”) at $      per Share.  Unless
earlier terminated, this option shall expire on, and cannot be exercised on or
after, the tenth anniversary of the Grant Date (the “Expiration Date”).

 

It is intended that the option evidenced by this agreement shall be an incentive
stock option as defined in Section 422 of the Code.  For so long as the Code
shall so provide, options granted to any employee which are intended to
constitute incentive stock options shall not constitute incentive stock options
to the extent that such options, in the aggregate, become exercisable for the
first time in any one calendar year for shares of Common Stock with an aggregate
fair market value (determined as of the respective date or dates of grant) of
more than $100,000.  Any shares granted above the $100,000 limit are considered
non-qualified stock options.  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.

 

Except as otherwise provided in this Agreement, this option shall become fully
exercisable as to all of the Shares on the fifth anniversary of the Grant Date
(the “Fifth Anniversary Date”).  Notwithstanding the foregoing, if prior to the
Fifth Anniversary Date the Company determines that the cash EPS targets set
forth below have been met, and if the Board of

 

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Directors so concurs, then this option shall immediately become exercisable as
to not more than the number of shares set forth opposite such cash EPS target in
the table below.

 

Cash EPS Target

 

Number of
Shares as to which
Option is Exercisable

 

 

 

 

 

 

 

[Vesting Schedule omitted for purposes of form of option]

 

The right of exercise shall be cumulative so that to the extent the option is
not exercised at any time 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 Expiration Date or the termination of this
option under Section 3 hereof or the Plan.

 

3.                                       Exercise of Option.

 

(a)                                  Form of Exercise.  Each election to
exercise this option shall be in writing specifying the number of Shares to be
exercised, the option exercise price per Share and delivery instructions for the
Shares, signed by the Participant, and received by the Company at its principal
office, accompanied by payment in full as follows:

 

(i)                                     in cash or by check, payable to the
order of the Company; or

 

(ii)                                  by delivery of cash or a check equal to
the exercise price of the options by a creditworthy broker;

 

(iii)                               by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by (or in a
manner approved by) the Board in good faith, with written proof that the Common
Stock was owned by the Participant at least twelve months prior to such
delivery; or

 

(iv)                              by any combination of the above permitted
forms of payment.

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)                                 No Special Employment Rights; Agreement Not
To Compete.  Nothing contained in the Plan shall be construed or deemed by any
person under any circumstances to bind the Company to continue the employment of
the Participant for the period within which this option

 

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may be exercised.  The Company expressly reserves the right at any time to
dismiss or otherwise terminate its relationship with a Participant free from any
claim under the Plan.  In consideration of the benefits herein conferred, the
Participant hereby agrees and covenants with the Company that for a period of
one (1) year following any termination of his or her employment with the Company
he or she (i) will not hire, attempt to hire, solicit, or attempt to solicit to
hire, or assist another or participate in any manner in the hiring or soliciting
for hire, of any person employed by Keane within the one (1) year prior to the
termination of his or her employment; and (ii) will not “compete” with Keane. 
For purposes of the Agreement, “competing” is defined as soliciting or doing
business with, directly or indirectly, any present or past (within the two years
prior to the termination of his or her employment) customer of Keane, or any
prospective customer of Keane, with whom he or she has had contact in connection
with any business activity, but is limited to the type of services provided by
Keane to any of its customers during the term of his or her employment.

 

(c)                                  Continuous Relationship with the Company
Required.  Except as otherwise 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”).

 

(d)                                 No Rights As Stockholder.  No Participant
shall have any rights as a stockholder with respect to any shares of Common
Stock to be distributed with respect to this option (including, without
limitation, any rights to dividends or distributions) until becoming the record
holder of such shares.  Notwithstanding the foregoing, in the event the Company
effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this option are adjusted
as of the date of the distribution of the dividend (rather than as of the record
date for such dividend), then if the Participant exercises this option between
the close of business on the record date for such stock dividend and the close
of business on the distribution date for such stock dividend, he or she shall be
entitled to receive, on the distribution date, the stock dividend with respect
to the shares of Common Stock acquired upon such option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.

 

(e)                                  Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible Participant for any
reason, then, except as provided in paragraphs (f) and (g) below, the right to
exercise this option shall terminate forty-five (45) days after such cessation
(but in no event after the Expiration 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 Expiration 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.

 

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(f)                                    Exercise Period Upon Death or
Disability.  If the Participant dies or 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 (g) 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 Expiration Date.

 

(g)                                 Discharge for Cause.  If the Participant,
prior to the Expiration Date, 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 mean misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company in the best interests of the Company (including,
but not limited to, breach by the Participant of any provision of any
employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company), as determined by the
Company, which determination shall be conclusive.  The Participant shall be
considered to have been discharged for “Cause” if the Company determines, within
30 days after the Participant’s resignation, that discharge for cause was
warranted.

 

(h)                                 Changes in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any distribution to holders of Common
Stock other than a normal cash dividend, in each case other than an Acquisition
Event (as defined in the Plan), the number and class of securities and exercise
price per share subject to this option shall be appropriately adjusted by the
Company to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate.

 

4.                                       Withholding.  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 this option.

 

5.                                       Nontransferability of Option.  This
option may not be sold, assigned, transferred, pledged or otherwise encumbered
by the Participant, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.

 

6.                                       Disqualifying Disposition.  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 within 30 days of such disposition.

 

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7.                                       Provisions of the Plan.   This option
is subject to the provisions of the Plan, a copy of which is furnished to the
Participant with this option.

 

8.                                       Notice.  All notices required or
permitted hereunder shall be in writing and deemed effectively given upon
personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, postage prepaid, addressed to the other party
hereto at the address shown beneath his or her or its respective signature to
this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 13.

 

9.                                       Pronouns.  Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural, and vice versa.

 

10.                                 Entire Agreement.  This Agreement
constitutes the entire agreement between the parties, and supercedes all prior
agreements and understanding, relating to the subject matter of this Agreement.

 

11.                                 Amendment.  This Agreement may be amended or
modified only by a written instrument executed by both the Company and the
Employee.

 

12.                                 Governing Law.  This Agreement shall be
governed by and enforced in accordance with the internal laws of the
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of law thereof.

 

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.

 

 

 

KEANE, INC.

 

 

 

 

 

 

Name/Title

 

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PARTICIPANT’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 Incentive Plan.

 

 

 

PARTICIPANT:

 

 

 

 

 

Signature:

 

 

 

 

 

Name (please print):

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

I have read the terms and conditions of the foregoing option and choose NOT TO
ACCEPT the option agreement.

 

 

PARTICIPANT:

 

 

 

 

 

Signature:

 

 

 

 

 

Name (please print):

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

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