Exhibit (d)(6)
FORM OF KPMG CONSULTING, INC. STOCK OPTION AGREEMENT FOR NON-
EMPLOYEE DIRECTORS, PURSUANT TO THE KPMG CONSULTING, INC. 2000
LONG-TERM INCENTIVE PLAN, INCLUDING FORM OF AWARD NOTICE
KPMG CONSULTING, INC.
STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
KPMG Consulting, Inc., a Delaware corporation (the "Company"),
hereby grants to the individual (the "Optionee") named in the award notice
attached hereto (the "Award Notice") as of the date set forth in the Award
Notice (the "Option Date"), pursuant to the provisions of the KPMG Consulting,
Inc. 2000 Long-Term Incentive Plan (the "Plan"), a non-statutory stock option to
purchase from the Company the number of shares of its common stock, $0.01 par
value ("Stock"), set forth in the Award Notice (the "Option"), at the price per
share set forth in the Award Notice, upon and subject to the terms and
conditions set forth below, in the Award Notice and in the Plan. Capitalized
terms not defined herein shall have the meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement. The Option
shall be null and avoid unless the Optionee shall accept this Agreement by
executing the Award Notice in the space provided therefore and returning an
original execution copy of the Award Notice to the Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after the expiration date set forth in the Award
Notice (the "Expiration Date").
2.2. Exercise of Option.
(a) The Option shall become exercisable in accordance with
the exercise schedule set forth in the Award Notice (the "Exercise Schedule").
(b) If the Optionee ceases to be a director of the Company by
reason of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's ceasing to be a director and
may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earlier to occur of (i) the date which is
one year after the effective date of the Optionee's ceasing to be a director and
(ii) the Expiration Date.
(c) If the Optionee ceases to be a director of the Company by
reason of Retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's ceasing to be a director and
may thereafter be exercised by the Optionee or
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the Optionee's Legal Representative until and including the earlier to occur of
(i) the date which is three months after the effective date of the Optionee's
ceasing to be a director and (ii) the Expiration Date.
(d) If the Optionee ceases to be a director of the Company by
reason of death, the Option shall be exercisable only to the extent it is
exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earlier to occur of (i) the date which is one year after
the date of death and (ii) the Expiration Date.
(e) If the Optionee ceases to be a director of the Company for
any reason other than Disability, Retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's ceasing to be a director and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earlier
to occur of (i) the date which is three months after the effective date of the
Optionee's ceasing to be a director and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in
Section 2.2(b) following such Optionee's ceasing to be a director of the Company
by reason of Disability, or if the Optionee dies during the period set forth in
Section 2.2(c) following such Optionee's ceasing to be a director of the Company
by reason of Retirement, or if the Optionee dies during the period set forth in
Section 2.2(e) following such Optionee's ceasing to be a director of the Company
for any reason other than Disability or Retirement, the Option shall be
exercisable only to the extent it is exercisable on the date of death and may
thereafter be exercised by the Optionee's Legal Representative or Permitted
Transferees, as the case may be, until and including the earlier to occur of (i)
the date which is one year after the date of death and (ii) the Expiration Date.
(g) Notwithstanding Sections 2.1 and 2.4 and the exercise
periods set forth in the Award Notice and in subsections (b), (c), (d), (e) and
(f) of this Section 2.2, in the event the Company is involved in a business
combination, including a business combination which is intended to be treated as
a pooling of interests for financial accounting purposes (a "Pooling
Transaction"), in connection with which the Optionee receives a substitute
option to purchase securities of any entity, including an entity directly or
indirectly acquiring the Company:
(1) if the acquisition of the substitute option by the
Optionee may be treated as a purchase for purposes of Section 16(b) of the
Exchange Act and the Optionee's service as a director of the Company is
terminated for any reason during the nine-month period beginning three months
prior to the consummation of such business combination, then the Option (or
option in substitution thereof) shall be exercisable to the extent set forth in
the Award Notice and above in this Section 2.2 until and including the latest to
occur of (i) the date determined pursuant to the then applicable subsection (b),
(c), (d), (e) or (f) of this Section 2.2, (ii) the date which is seven months
after the consummation of such business combination and (iii) the Expiration
Date; or
(2) if the Optionee is restricted from disposing of a security
(or security underlying a security) issued in connection with the Pooling
Transaction and the purpose of such restriction is to ensure that the Pooling
Transaction is accounted for as a pooling of interests (the "Pooling
Restriction") and the Optionee's service as a director of the Company is
terminated for
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any reason during the nine-month period beginning three months prior to the
consummation of such business combination, then the Option (or option in
substitution thereof) shall be exercisable to the extent set forth in the Award
Notice and above in this Section 2.2 until and including the latest to occur of
(i) the date determined pursuant to the then applicable subsection (b), (c),
(d), (e) or (f) of this Section 2.2, (ii) the date which is one month after the
date of expiration of the Pooling Restriction and (iii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth
in this Agreement, the Option may be exercised by the Optionee (a) by giving
written notice to the Company specifying the number of whole shares of Stock to
be purchased and by accompanying such notice with payment therefore in full (or
by arranging for such payment to the Company's satisfaction) either (i) in cash,
(ii) by delivery to the Company (either actual delivery or by attestation
procedures established by the Company) of Mature Shares having an aggregate Fair
Market Value, determined as of the date of exercise, equal to the aggregate
purchase price payable pursuant to the Option by reason of such exercise, (iii)
in cash by a broker-dealer acceptable to the Company to whom the Optionee has
submitted an irrevocable notice of exercise or (iv) by a combination of (i),
(ii), and (iii), and (b) by executing such documents as the Company may
reasonably request. The Company shall have sole discretion to disapprove of an
election pursuant to any of clauses (ii) - (iv). Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the Optionee. No
certificate representing a share of Stock shall be delivered until the full
purchase price therefore has been paid.
2.4 Termination of Option.
(a) Subject to Section 2.2(g), in no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not earlier terminated pursuant to Section 2.2 or
exercised pursuant to Section 2.3, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Stock subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be;
provided, however, that such cancellation shall be effective regardless of
whether the Optionee returns this Agreement. If the Optionee continues to have
rights to purchase shares of Stock hereunder, the Company shall, within 10 days
of the Optionee's delivery of this Agreement to the Company, either (i) mark
this Agreement to indicate the extent to which the Option has expired or been
exercised, cancelled or forfeited or (ii) issue to the Optionee a substitute
option agreement applicable to such rights, which agreement shall otherwise be
substantially similar to this Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option; Restriction on Transfer of
Stock.
(a) The Option may not be transferred by the Optionee other
than by will or the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company. Except to the extent permitted
by the foregoing sentence, during the Optionee's lifetime the Option is
exercisable only by the Optionee or the Optionee's Legal Representative. Except
to the extent permitted by the second preceding sentence, the Option may not be
sold,
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transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of the Option, the Option and
all rights hereunder shall immediately become null and void.
(b) The shares of Stock purchased upon exercise of the Option
may not be transferred by the Optionee prior to the termination of the Lock-Up
Period other than by will or the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Company. Except to the extent
permitted by the foregoing sentence, prior to the termination of the Lock-Up
Period the shares of Stock purchased upon exercise of the Option may not be
sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise
disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process.
3.2. Investment Representation. The Optionee hereby represents
and covenants that (a) any shares of Stock purchased upon exercise of the Option
will be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act unless such purchase has been
registered under the Securities Act and any applicable state securities laws;
(b) any subsequent sale of any such shares shall be made in compliance with
Section 3.1(b) either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in a form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of any purchase of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to any exercise of
the Option, the Optionee shall comply with all regulations and requirements of
any regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Adjustment. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Stock other than a regular cash dividend, the number and class of securities
subject to the Option and the purchase price per security shall be appropriately
adjusted by the Committee without an increase in the aggregate purchase price.
If any adjustment would result in a fractional security being subject to the
Option, the Company shall pay the Optionee, in connection with the first
exercise of the Option occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on
the exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
3.4. Compliance with Applicable Law. The Option is subject to
the condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
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part, and such shares may not be delivered, unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company
agrees to use reasonable efforts to effect or obtain any such listing,
registration, qualification, consent, approval or other action.
3.5. Delivery of Certificates. Upon the exercise of the
Option, in whole or in part, the Company shall deliver or cause to be delivered,
subject to the conditions of this Article 3, one or more certificates
representing the number of shares purchased against full payment therefore. The
Company shall pay all original issue or transfer taxes and all fees and expenses
incident to such delivery.
3.6. Option Confers No Rights as Stockholder. The Optionee
shall not be entitled to any privileges of ownership with respect to shares of
Stock subject to the Option unless and until such shares are purchased and
delivered upon the exercise of the Option, in whole or in part, and the Optionee
becomes a stockholder of record with respect to such delivered shares. The
optionee shall not be considered a stockholder of the Company with respect to
any such shares not so purchased and delivered.
3.7. Option Confers No Rights to Continue to Serve as a
Director. In no event shall the granting of the Option or its acceptance by the
Optionee, or any provision of this Agreement or the Plan, give or be deemed to
give the Optionee any right to continue to serve, to be elected or reelected to
serve, or to be nominated to serve as a director of the Company.
3.8. Decisions of Board or Committee. The Board or the
Committee shall have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation, determination or
other action made or taken by the Board or the Committee regarding the Plan or
this Agreement shall be final, binding and conclusive.
3.9. Company to Reserve Shares. The Company shall at all
times prior to the expiration or termination of the Option reserve and keep
available, either in its treasury or out of its authorized but unissued shares
of Stock, the full number of shares of Stock subject to the Option from time
to time.
3.10. Agreement Subject to Plan. This Agreement is subject to
the provisions of the Plan, including Section 6.8 relating to a Change in
Control, and shall be interpreted in accordance therewith. The Optionee hereby
acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Non-Statutory Stock Option. The Option is
hereby designated as not constituting an Incentive Stock Option. This Agreement
shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the following
terms shall have the meanings set forth below:
"Legal Representative" shall include an executor,
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administrator, legal representative, guardian or similar person.
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"Lock-Up Period" shall mean the period required by the
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underwriters of an IPO following an IPO during which individuals holding shares
of Common Stock shall be prohibited from selling, offering, contracting to sell
or otherwise transferring or disposing of such shares of Common Stock, directly
or indirectly.
"Securities Act" shall mean the Securities Act of 1933, as
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amended, and the rules and regulations thereunder.
"Permitted Transferee" shall include any transferee designated
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as the Optionee's beneficiary in the event of the Optionee's death pursuant to
beneficiary designation procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Company and any
person or persons who shall, upon the death of the Optionee, acquire any rights
hereunder in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications
provided for in this Agreement shall be made, if to the Company, to KPMG
Consulting, Inc., Attn: General Counsel, 0000 Xxxxxxxxxxxxx Xxxxx, XxXxxx,
Xxxxxxxx 00000, and if to the Optionee, to the last known mailing address of the
Optionee contained in the records of the Company. All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery, (b) by facsimile with confirmation of receipt, (c) by
mailing in the United States mails or (d) by express courier service. The
notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or other
communication sent to the Company is not received during regular business hours,
it shall be deemed to be received on the next succeeding business day of the
Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the Code or the laws of the United States, shall be governed by
the laws of the State of Delaware and construed in accordance therewith without
giving effect to principles of conflicts of laws.
4.6. Counterparts. The Award Notice may be executed in two
counterparts, each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
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[insert date]
[name and address of optionee]
Re: Award Notice of Stock Option Grant
---------------------------------------
Dear [name of optionee]:
We are pleased to notify you that in recognition of your contributions toward
the future success of KPMG Consulting, Inc., you have been awarded an option to
purchase shares of common stock of KPMG Consulting, Inc. (the "Company").
-------
Certain terms of your award follow:
Option: You have been awarded a non-statutory stock option to
------- purchase from the Company [insert number] shares of
its common stock, $0.01 par value, subject to
adjustment, as provided in Section 3.3 of the KPMG
Consulting, Inc. Stock Option Agreement for
Non-Employee Directors (the "Agreement").
Option Date: January 31, 2000
------------
Exercise Price: [insert price] per share, subject to adjustment, as
--------------- provided in Section 3.3 of the Agreement.
Exercise Schedule: Except as otherwise provided in Section 2.2 of the
------------------ Agreement and in Section 6.8 of the KPMG Consulting,
Inc. 2000 Long-Term Incentive Plan (the "Plan"), the
Option shall become exercisable (i) on the first
anniversary of the Option Date with respect to 25%
of the number of shares subject thereto on the
Option Date, (ii) on the second anniversary of the
Option Date with respect to an additional 25% of the
number of shares subject thereto on the Option Date,
(iii) on the third anniversary of the Option Date
with respect to an additional 25% of the number of
shares subject thereto on the Option Date and (iv)
on the fourth anniversary of the Option Date with
respect to the remaining 25% of the number of shares
subject thereto on the Option Date.
Expiration Date: Except to the extent earlier terminated
---------------- pursuant to Section 2.2 of the Agreement or earlier
exercised pursuant to Section 2.3 of the Agreement,
the Option shall terminate at 5:00 p.m., New York
time, on January 30, 2010.
In addition to the terms stated in this Award Notice, the Option shall
be subject to the terms and conditions of the Agreement and the Plan, copies of
which are attached hereto.
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We congratulate you on this recognition of your importance to our organization
and its future.
KPMG CONSULTING, INC.
By: ______________________________
Name:
Title:
Acknowledgment, Acceptance and Agreement:
-----------------------------------------
By signing below and returning this Award Notice to KPMG Consulting, Inc., c/x
Xxxxxx Xxxxxxx Xxxx Xxxxxx at the address stated herein, I hereby acknowledge
receipt of the Agreement and the Plan, accept the Option granted to me and agree
to be bound by the terms and conditions of this Award Notice, the Agreement and
the Plan.
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Optionee Date
KPMG CONSULTING, INC.
c/x Xxxxxx Xxxxxxx Xxxx Xxxxxx
Stock Plan Administration
Harborside Financial Center
Plaza Two, 7th Floor
Jersey City, NJ 07311
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