INCENTIVE STOCK OPTION AGREEMENT









EXHIBIT 10.1(b)




 




INCENTIVE STOCK OPTION

AGREEMENT




 




UNDER THE STOCKER &

YALE, INC.




1996 STOCK OPTION AND

INCENTIVE PLAN




 




 




Name of

Optionee:_____________________________




No. of Option

Shares:___________________________




Option Exercise

Price per Share:_____________________________________




[FMV (110%

of FMV if a 10% owner)]




Grant

Date:____________________




Expiration

Date:_____________________________________




[up to 10

years (5 if a 10% owner)]




 




 




Pursuant to

the Stocker & Yale, Inc. 1996 Stock Option and Incentive Plan (the “Plan”)

as amended through the date hereof, Stocker & Yale, Inc.  (the “Company”) hereby grants to the

Optionee named above an option (the “Stock Option”) to purchase on or prior to

the Expiration Date specified above all or part of the number of shares of

Common Stock, par value $.001 per share (the “Stock”) of the Company specified

above at the Option Exercise Price per Share specified above subject to the

terms and conditions set forth herein and in the Plan.




 




1.             Vesting Schedule.  No portion of this Stock Option may be

exercised until such portion shall have vested.  Except as set forth below, and subject to the discretion of the

Committee (as defined in Section 2 of the Plan) to accelerate the vesting

schedule hereunder, this Stock Option shall be vested and exercisable with

respect to the following number of Option Shares on the dates indicated:




 








	

  Number of


  	

   


  	

   


  	

   


  
	

  Option

  Shares Exercisable*


  	

   


  	

  Vesting

  Date


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (___%


  	

  )


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (___%


  	

  )


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (___%


  	

  )


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (___%


  	

  )


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (___%


  	

  )


  	

   


  	

   


  










 




* Max. of $100,000 per yr.




 




 





























 




In the event of a Change of Control of the Company as defined

in Section 14 of the Plan, this Stock Option shall become immediately vested

and exercisable in full, whether or not this Stock Option or any portion hereof

is vested and exercisable at such time. 

Once vested, this Stock Option shall continue to be exercisable at any

time or times prior to the close of business on the Expiration Date, subject to

the provisions hereof and of the Plan.




 




2.             Manner

of Exercise.




 




(a)           The

Optionee may exercise this Option only in the following manner:  from time to time on or prior to the

Expiration Date of this Option, the Optionee may give written notice to the

Committee of his or her election to purchase some or all of the vested Option

Shares purchasable at the time of such notice. 

This notice shall specify the number of Option Shares to be purchased.




 




Payment of the purchase price for the Option Shares may be

made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument

acceptable to the Committee; (ii) in the form of shares of Stock that are

not then subject to restrictions under any Company plan and that have been held

by the Optionee for at least six months; (iii) by the Optionee delivering

to the Company a properly executed exercise notice together with irrevocable

instructions to a broker to promptly deliver to the Company cash or a check

payable and acceptable to the Company to pay the option purchase price,

provided that in the event the Optionee chooses to pay the option purchase

price as so provided, the Optionee and the broker shall comply with such

procedures and enter into such agreements of indemnity and other agreements as

the Committee shall prescribe as a condition of such payment procedure; or

(iv) a combination of (i), (ii) and (iii) above.  Payment instruments will be received subject to collection.




 




The delivery of certificates representing the Option Shares

will be contingent upon the Company’s receipt from the Optionee of full payment

for the Option Shares, as set forth above and any agreement, statement or other

evidence that the Company may require to satisfy itself that the issuance of

Stock to be purchased pursuant to the exercise of Options under the Plan and

any subsequent resale of the shares of Stock will be in compliance with

applicable laws and regulations.




 




(b)           Certificates

for the shares of Stock purchased upon exercise of this Stock Option shall be

issued and delivered to the Optionee upon compliance to the satisfaction of the

Committee with all requirements under applicable laws or regulations in

connection with such issuance and with the requirements hereof and of the

Plan.  The determination of the

Committee as to such compliance shall be final and binding on the

Optionee.  The Optionee shall not be

deemed to be the holder of, or to have any of the rights of a holder with

respect to, any shares of Stock subject to this Stock Option unless and until

this Stock Option shall have been exercised pursuant to the terms hereof, the

Company shall have issued and delivered the shares to the Optionee, and the

Optionee’s name shall have been entered as the stockholder of record on the

books of the Company.




 




2





























 




Thereupon,

the Optionee shall have full voting, dividend and other ownership rights with

respect to such shares of Stock.




 




(c)           The

minimum number of shares with respect to which this Stock Option may be

exercised at any one time shall be 100 shares, unless the number of shares with

respect to which this Stock Option is being exercised is the total number of

shares subject to exercise under this Stock Option at the time.




 




(d)           Notwithstanding

any other provision hereof or of the Plan, no portion of this Stock Option

shall be exercisable after the Expiration Date hereof.




 




3.             Termination

of Employment.  If the Optionee’s

employment by the Company or a Subsidiary (as defined in the Plan) is

terminated, the period within which to exercise the Option may be subject to

earlier termination as set forth below.




 




(a)           Termination

Due to Death.  If the Optionee’s

employment terminates by reason of death, any Option held by the Optionee shall

become fully exercisable and may thereafter be exercised by the Optionee’s

legal representative or legatee for a period of 12 months from the date of

death or until the Expiration Date, if earlier.




 




(b)           Termination

Due to Disability.  If the

Optionee’s employment terminates by reason of Disability (as defined in the Plan),

any Option held by the Optionee shall become fully exercisable and may

thereafter be exercised by the Optionee for a period of [12 ]months from the

date of termination or until the Expiration Date, if earlier.  The death of the Optionee during the [12]-month

period provided in this Section 3(b) shall extend such period for another

[12] months from the date of death or until the Expiration Date, if earlier.




 




(c)           Termination

for Cause.  If the Optionee’s

employment terminates for Cause (as defined in the Plan), any Option held by

the Optionee shall terminate immediately and be of no further force and effect.




 




(d)           Other

Termination.  If the Optionee’s

employment terminates for any reason other than death, Disability, or Cause,

and unless otherwise determined by the Committee, any Option held by the

Optionee may be exercised, to the extent exercisable on the date of

termination, for a period of three months from the date of termination or until

the Expiration Date, if earlier.  Any

Option that is not exercisable at such time shall terminate immediately and be

of no further force or effect.




 




 The Committee’s determination of the reason

for termination of the Optionee’s employment shall be conclusive and binding on

the Optionee and his or her representatives or legatees.




 




4.             Incorporation

of Plan.  Notwithstanding anything

herein to the contrary, this Stock Option shall be subject to and governed by

all the terms and conditions of the Plan.




 




3





























 




Capitalized terms in this Agreement shall have the meaning

specified in the Plan, unless a different meaning is specified herein.




 




5.             Transferability.  This Agreement is personal to the Optionee,

is non-assignable and is not transferable in any manner, by operation of law or

otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the

Optionee’s lifetime, only by the Optionee, and thereafter, only by the

Optionee’s legal representative or legatee.




 




6.             Status

of the Stock Option.  This Stock

Option is intended to qualify as an “incentive stock option” under Section 422

of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company

does not represent or warrant that this Option qualifies as such.  The Optionee should consult with his or her

own tax advisors regarding the tax effects of this Option and the requirements

necessary to obtain favorable income tax treatment under Section 422 of

the Code, including, but not limited to, holding period requirements.  If the Optionee intends to dispose or does

dispose (whether by sale, gift, transfer or otherwise) of any Option Shares

within the one-year period beginning on the date after the transfer of such

shares to him or her, or within the two-year period beginning on the day after

the grant of this Stock Option, he or she will notify the Company within 30

days after such disposition.




 




7.             Miscellaneous.




 




(a)           Notice

hereunder shall be given to the Company at its principal place of business, and

shall be given to the Optionee at the address set forth below, or in either

case at such other address as one party may subsequently furnish to the other

party in writing.




 




(b)           This Stock

Option does not confer upon the Optionee any rights with respect to continuance

of employment by the Company or any Subsidiary.




 




(c)           Pursuant

to Section 12 of the Plan, the Committee may at any time amend or cancel any

outstanding portion of this Stock Option, but no such action may be taken which

adversely affects the Optionee’s rights under this Agreement without the

Optionee’s consent.




 




 




	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

   


  	

  Title:


  





 




 




4





























 




The

foregoing Agreement is hereby accepted and the terms and conditions thereof

hereby agreed to by the undersigned.




 




 




	

  Dated:


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  Optionee’s

  Signature


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  Optionee’s name

  and address:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  





 




 




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