exv10w7



 







Exhibit 10.7




NITROSECURITY, INC.




Form of

Incentive Stock Option Agreement

Granted Under 2005 Stock Incentive Plan





	1.	 	Grant of Option.





     This agreement evidences the grant by NitroSecurity, Inc., a Delaware corporation (the
“Company”), on                     , 200___ (the “Grant Date”) to                     , 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 2005 Stock Incentive Plan (the “Plan”), a total of                      shares (the
“Shares”) of common stock, $0.01 par value per share, of the Company (“Common Stock”) at $                     per
Share. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on
                     (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.





     This option will become exercisable (“vest”) as to                     .



     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.





     (a) Form of Exercise. Each election to exercise this option shall be in writing,
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 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 Grant Date, an employee or officer
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 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 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 (or in
the case of death by an authorized transferee), 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, 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 willful
misconduct by the Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, 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.




	4.	 	Agreement in Connection with Public Offering.





     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 of 1933, as
amended, (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, 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.



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	5.	 	Tax Matters.





     (a) 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.



     (b) Disqualifying Disposition. If the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date 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.




	6.	 	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.




	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.



     IN WITNESS WHEREOF, the Company has caused this option to be executed by its duly authorized
officer.



	 	 	 	 	 
	 	NITROSECURITY, INC.

 	 
	 	By:  	 	 
	 	 	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 2005 Stock
Incentive Plan.



	 	 	 	 	 	 	 
	 	 	PARTICIPANT:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 






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NOTICE OF STOCK OPTION EXERCISE




Date:                     




NitroSecurity, Inc.

230 Commerce Way

Suite 325

Portsmouth, NH 03801




Attention: Treasurer




Dear Sir or Madam:




     I am the holder of an Incentive Stock Option granted to me under the NitroSecurity, Inc. (the
“Company”) 2005 Stock Incentive Plan on                      for the purchase of                      shares of Common
Stock of the Company at a purchase price of $                      per share.



     I hereby exercise my option to purchase                      shares of Common Stock (the “Shares”), for
which I have enclosed [insert method of payment] in the amount of $                     . Please register my
stock certificate as follows:



	 	 	 	 	 
	Name(s):
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Tax I.D. #:
	 	 	 	 
	 

	 	 

	 	 






     I represent, warrant and covenant as follows:



     1. I am purchasing the Shares for my own account for investment only, and not with a view to,
or for sale in connection with, any distribution of the Shares in violation of the Securities Act
of 1933 (the “Securities Act”), or any rule or regulation under the Securities Act.



     2. I have had such opportunity as I have deemed adequate to obtain from representatives of the
Company such information as is necessary to permit me to evaluate the merits and risks of my
investment in the Company.



     3. I have sufficient experience in business, financial and investment matters to be able to
evaluate the risks involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.



     4. I can afford a complete loss of the value of the Shares and am able to bear the economic
risk of holding such Shares for an indefinite period.



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     5. I understand that (i) the Shares have not been registered under the Securities Act and are
“restricted securities” within the meaning of Rule 144 under the Securities Act, (ii) the Shares
cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under
the Securities Act or an exemption from registration is then available; (iii) in any event, the
exemption from registration under Rule 144 will not be available for at least one year and even
then will not be available unless a public market then exists for the Common Stock, adequate
information concerning the Company is then available to the public, and other terms and conditions
of Rule 144 are complied with; and (iv) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the Company and the Company has no
obligation or current intention to register the Shares under the Securities Act.



	 	 	 
	Very truly yours,
	 	 
	 
	 	 
	 
	 	 
	 

(Signature)

	 	 







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