**Exhibit 10.2**

 

 

**Keane, Inc.**

 

 

**Incentive Stock Option Agreement**

**Granted Under 2001 Stock IncentivePlan**

 

1.                                       Grantof Option.

 

This agreement evidencesthe 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-ownedsubsidiaries, as defined in Section 424(f) of the Internal Revenue Code of1986, as amended and any regulations promulgated thereunder (the”Code”), of anoption to purchase, in whole or in part, on the terms provided herein and inthe Company’s 2001 Stock Incentive Plan (the “Plan”), a total of        shares ofcommon 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 beexercised on or after, the tenth anniversary of the Grant Date (the “ExpirationDate”).

 

It isintended that the option evidenced by this agreement shall be an incentive stockoption 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 incentivestock options shall not constitute incentive stock options to the extent thatsuch options, in the aggregate, become exercisable for the first time in anyone calendar year for shares of Common Stock with an aggregate fair marketvalue (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 anyperson who acquires the right to exercise this option validly under its terms.

 

2.                                       VestingSchedule.

 

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

 

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Directorsso concurs, then this option shall immediately become exercisable as to notmore than the number of shares set forth opposite such cash EPS target in thetable below.

 
| **Cash EPS Target** | ** ** | **Number of  Shares as to which  Option is Exercisable** | ** ** |
|---------------------|------------|----------------------------------------------------------|------------|

 

 

**[Vesting Schedule omitted forpurposes of form of option]**

 

Theright of exercise shall be cumulative so that to the extent the option is notexercised at any time to the maximum extent permissible it shall continue to beexercisable, in whole or in part, with respect to all Shares for which it isvested until the earlier of the Expiration Date or the termination of thisoption under Section 3 hereof or the Plan.

 

3.                                       Exerciseof Option.

 

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

 

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

 

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

 

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

 

(iv)                              byany combination of the above permitted forms of payment.

The Participant maypurchase less than the number of shares covered hereby, provided that nopartial exercise of this option may be for any fractional share or for fewerthan ten whole shares.

 

(b)                                 NoSpecial Employment Rights; Agreement Not To Compete.  Nothing contained in the Plan shall be construedor deemed by any person under any circumstances to bind the Company to continuethe employment of the Participant for the period within which this option

 

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may beexercised.  The Company expressly reservesthe right at any time to dismiss or otherwise terminate its relationship with aParticipant free from any claim under the Plan. In consideration of the benefits herein conferred, the Participanthereby agrees and covenants with the Company that for a period of one (1) yearfollowing 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, orassist another or participate in any manner in the hiring or soliciting forhire, of any person employed by Keane within the one (1) year prior to thetermination of his or her employment; and (ii) will not “compete” withKeane.  For purposes of the Agreement, “competing”is defined as soliciting or doing business with, directly or indirectly, anypresent or past (within the two years prior to the termination of his or heremployment) customer of Keane, or any prospective customer of Keane, with whomhe or she has had contact in connection with any business activity, but is limitedto the type of services provided by Keane to any of its customers during theterm of his or her employment.

 

(c)                                  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 date of grant of this option,an employee, officer or director of, or consultant or advisor to, the Companyor any parent or subsidiary of the Company as defined in Section 424(e) or(f) of the Code (an “Eligible Participant”).

 

(d)                                 NoRights As Stockholder.  NoParticipant shall have any rights as a stockholder with respect to any sharesof Common Stock to be distributed with respect to this option (including,without limitation, any rights to dividends or distributions) until becomingthe record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a splitof the Common Stock by means of a stock dividend and the exercise price of andthe number of shares subject to this option are adjusted as of the date of thedistribution of the dividend (rather than as of the record date for suchdividend), then if the Participant exercises this option between the close ofbusiness on the record date for such stock dividend and the close of businesson the distribution date for such stock dividend, he or she shall be entitledto receive, on the distribution date, the stock dividend with respect to theshares of Common Stock acquired upon such option exercise, notwithstanding thefact that such shares were not outstanding as of the close of business on therecord date for such stock dividend.

 

(e)                                  Terminationof Relationship with the Company.  Ifthe Participant ceases to be an Eligible Participant for any reason, then,except as provided in paragraphs (f) and (g) below, the right to exercisethis option shall terminate forty-five (45) days after such cessation (but inno event after the Expiration Date), providedthat this optionshall be exercisable only to the extent that the Participant was entitled toexercise this option on the date of such cessation.  Notwithstanding the foregoing, if theParticipant, prior to the Expiration 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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(f)                                    ExercisePeriod Upon Death or Disability.  Ifthe 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 EligibleParticipant and the Company has not terminated such relationship for “cause” asspecified in paragraph (g) below, this option shall be exercisable, within theperiod of one year following the date of death or disability of the Participantby the Participant, providedthat this option shall beexercisable only to the extent that this option was exercisable by theParticipant on the date of his or her death or disability, and further providedthat this option shall not be exercisable after the Expiration Date.

 

(g)                                 Dischargefor Cause.  If the Participant, priorto the Expiration Date, is discharged by the Company for “cause” (as definedbelow), the right to exercise this option shall terminate immediately upon theeffective date of such discharge. “Cause” shall mean misconduct by theParticipant or willful failure by the Participant to perform his or herresponsibilities to the Company in the best interests of the Company(including, but not limited to, breach by the Participant of any provision ofany employment, 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 shall be considered to havebeen discharged for “Cause” if the Company determines, within 30 days after theParticipant’s resignation, that discharge for cause was warranted.

 

(h)                                 Changesin Capitalization.  In the event ofany stock split, reverse stock split, stock dividend, recapitalization,combination of shares, reclassification of shares, spin-off or other similarchange in capitalization or event, or any distribution to holders of CommonStock other than a normal cash dividend, in each case other than an AcquisitionEvent (as defined in the Plan), the number and class of securities and exerciseprice per share subject to this option shall be appropriately adjusted by theCompany to the extent the Board shall determine, in good faith, that such anadjustment (or substitution) is necessary and appropriate.

 

4.                                       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, stateor local withholding taxes required by law to be withheld in respect of thisoption.

 

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

 

6.                                       DisqualifyingDisposition.  If the Participantdisposes of Shares acquired upon exercise of this option within two years fromthe date of grant of the option or one year after such Shares were acquiredpursuant to exercise of this option, the Participant shall notify the Companyin writing of such disposition within 30 days of such disposition.

 

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7.                                       Provisionsof the Plan.   This option is subjectto the provisions of the Plan, a copy of which is furnished to the Participantwith this option.

 

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

 

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

 

10.                                 EntireAgreement.  This Agreementconstitutes the entire agreement between the parties, and supercedes all prioragreements and understanding, relating to the subject matter of this Agreement.

 

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

 

12.                                 GoverningLaw.  This Agreement shall begoverned by and enforced in accordance with the internal laws of theCommonwealth of Massachusetts, without giving effect to the principles ofconflicts of law thereof.

 

INWITNESS WHEREOF, the Company has caused this option to be executed under itscorporate seal by its duly authorized officer. This option shall take effect as a sealed instrument.

 

 
|   | KEANE, INC. |
|--------|-------------|
|   |        |
|   |        |   |
|   | Name/Title  |

 

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**PARTICIPANT’SACCEPTANCE**

 

Theundersigned hereby accepts the foregoing option and agrees to the terms andconditions thereof.  The undersignedhereby acknowledges receipt of a copy of the Company’s 2001 Stock IncentivePlan.

 

 
|   | PARTICIPANT:          |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | Signature:            |   |   |
|   |                  |
|   | Name (please  print): |   |   |
|   |                  |
|   | Address:              |   |   |
|   |                  |   |   |
|   |                  |   |   |
|        |                       |  |  |  |  |

 

 

I haveread the terms and conditions of the foregoing option and choose NOT TOACCEPT the option agreement.

 
|   | PARTICIPANT:          |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | Signature:            |   |   |
|   |                  |
|   | Name (please  print): |   |   |
|   |                  |
|   | Address:              |   |   |
|   |                  |   |   |
|   |                  |   |   |
|        |                       |  |  |  |  |

 

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