**Exhibit 10.35**

 

Network Engines, Inc.

 

Incentive StockOption AgreementGranted Under 2009****Incentive Plan

 

# 1.             Grantof Option.

 

This agreement evidences the grant by Network Engines, Inc., aDelaware corporation (the “Company”), on          ,20    ****(the “GrantDate”)to                  ,an employee of the Company (the “Participant”), of an option to purchase, inwhole or in part, on the terms provided herein and in the Company’s 2009Incentive Plan (the “Plan”), a total of                  shares (the “Shares”) of common stock, $0.01****parvalue per share, of the Company (“Common Stock”) at$          ****per Share. Unless earlier terminated, this option shallexpire at 5:00 p.m., Eastern time, on              ****(the “Final Exercise Date”).

 

It is intended that the option evidenced by this agreement shall be anincentive stock option as defined in Section 422 of the Internal RevenueCode 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 anyperson who acquires the right to exercise this option validly under its terms.

 

2.             Vesting Schedule.

 

This option will become exercisable (“vest”) as to [25% of the originalnumber of Shares on the first****anniversary ofthe employment start date and as to an additional 6.25% of the original numberof Shares at the end of each successive****three-month****period following the first anniversary of the employmentstart date until the fourth anniversary of the employment start date] [6.25% ofthe original number of Shares at the end of each successive three-month periodfollowing the Grant Date until the fourth anniversary of the Grant Date].  This option shall expire upon, and will notbe exercisable after, the Final Exercise Date.

 

The right of exercise shall be cumulative so that to the extent theoption is not exercised in any period to the maximum extent permissible itshall continue to be exercisable, in whole or in part, with respect to allShares for which it is vested until the earlier of the Final Exercise Date orthe termination of this option under Section 3 hereof or the Plan.

 

3.             Exercise ofOption.

 

(a)           Form ofExercise.  Each election to exercisethis option shall be delivered in the manner or in the form directed by theCompany, and accompanied by payment in full in the manner provided in thePlan.  The Participant may purchase lessthan the number of shares covered hereby, provided that no partial exercise ofthis option may be for any fractional share.

 

(b)           ContinuousRelationship with the Company Required. Except as otherwise provided in this Section 3, this option may notbe exercised unless the Participant, at the time he or she exercises thisoption, is, and has been at all times since the Grant Date, an employee orofficer of, or consultant or advisor to, the Company or any parent orsubsidiary of the Company as defined in Section 424(e) or (f) ofthe Code (an “Eligible Participant”).

 

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(c)           Terminationof Relationship with the Company.  Ifthe Participant ceases to be an Eligible Participant for any reason, then,except as provided in paragraphs (d) and (e) below, the right toexercise this option shall terminate****three monthsafter such cessation or such other period of time as may be determined by theBoard (but in no event after the Final Exercise Date), providedthatthis option shall be exercisable only to the extent that the Participant wasentitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if theParticipant, prior to the Final Exercise Date, violates the non-competition orconfidentiality provisions of any employment contract, confidentiality andnondisclosure agreement or other agreement between the Participant and theCompany, the right to exercise this option shall terminate immediately uponwritten notice to the Participant from the Company describing such violation.

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(d)           ExercisePeriod Upon Death or Disability.  Ifthe Participant dies or becomes disabled (within the meaning of Section 22(e)(3) ofthe Code) prior to the Final Exercise Date while he or she is an EligibleParticipant and the Company has not terminated such relationship for “cause” asspecified in paragraph (e) below, this option shall be exercisable, withinthe period of one year following the date of death or disability of theParticipant, by the Participant (or in the case of death by an authorizedtransferee), providedthat this option shall be exercisable onlyto the extent that this option was exercisable by the Participant on the dateof his or her death or disability, and further provided that this option shallnot be exercisable after the Final Exercise Date.

 

(e)           Terminationfor Cause.  If, prior to the FinalExercise Date, the Participant’s employment is terminated by the Company forCause (as defined below), the right to exercise this option shall terminateimmediately upon the effective date of such termination of employment.  If the Participant is party to an employmentor severance agreement with the Company that contains a definition of “cause”for termination of employment, “Cause” shall have the meaning ascribed to suchterm in such agreement.  Otherwise, “Cause”shall mean willful misconduct by the Participant or willful failure by theParticipant to perform his or her responsibilities to the Company (including,without limitation, breach by the Participant of any provision of anyemployment, consulting, advisory, nondisclosure, non-competition or othersimilar agreement between the Participant and the Company), as determined bythe Company, which determination shall be conclusive.  The Participant’s employment shall beconsidered to have been terminated for Cause if the Company determines, within30 days after the Participant’s resignation, that termination for Cause waswarranted.

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4.             Tax Matters.

 

(a)           Withholding.  No Shares will be issued pursuant to theexercise 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 ofthis option.

 

(b)           DisqualifyingDisposition.  If the Participantdisposes of Shares acquired upon exercise of this option within two years fromthe Grant Date or one year after such Shares were acquired pursuant to exerciseof this option, the Participant shall notify the Company in writing of suchdisposition.

 

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5.             TransferRestrictions.

 

This option may not be sold, assigned, transferred, pledged orotherwise encumbered by the Participant, either voluntarily or by operation oflaw, except by will or the laws of descent and distribution, and, during thelifetime of the Participant, this option shall be exercisable only by theParticipant.

 

6.             Provisions ofthe Plan.

 

This option is subject to the provisions of the Plan(including the provisions relating to amendments to the Plan), a copy of whichis furnished to the Participant with this option.

 

IN WITNESS WHEREOF, the Company has caused this optionto be executed under its corporate seal by its duly authorized officer.  This option shall take effect as a sealedinstrument.

 

 
|   | Network Engines, Inc. |
|--------|----------------------------|
|   |                       |
|   | By:                        |   |
|   |                       |   |
|   |                       | Name: |   |
|   |                       | Title: |   |

 

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PARTICIPANT’SACCEPTANCE

 

The undersigned hereby accepts the foregoing option and agrees to theterms and conditions thereof.  Theundersigned hereby acknowledges receipt of a copy of the Company’s 2009Incentive Plan.

 
|   | PARTICIPANT: |
|--------|--------------|
|   |         |
|   |         |
|   |         |
|   | Address:     |   |
|   |         |   |

 

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