EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement") made as of October 9, 1998,
between SYNETIC, INC., a Delaware corporation (the "Company"), and XXXXXXX XXXXX
("Optionee").
RECITAL
The Company desires to provide Optionee with an opportunity to acquire
shares of Common Stock (as defined below) of the Company. As a result, the
Company has elected to issue to Optionee an option to acquire 190,000 shares of
its Common Stock and intends that such option comply with the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Section 162(m) of the Internal Revenue Code of 1986, as amended.
AGREEMENTS
In consideration of the Recital (which is incorporated by reference)
and the mutual covenants of this Agreement, the Company and Optionee agree as
follows:
1. Confirmation of Grant of Option. Pursuant to a determination by the
Stock Option Committee of the Board of Directors of the Company (the "Board"),
effective as of October 9, 1998 (the "Date of Grant"), the Company hereby
confirms that Optionee has been granted, subject to the terms of this Agreement,
the right (the "Option") to purchase 190,000 shares of Common Stock of the
Company ("Common Stock"). All of the shares hereunder are hereinafter referred
to as "Shares". Said number of Shares subject to the Option may be adjusted as
provided in Section 9.
As used herein, "Committee" shall mean the Stock Option Committee of
the Board (and any successor committee appointed by the Board).
2. Exercisability of Option.
2.1. Subject to the terms and conditions of this Agreement (including
Sections 2.3, 2.4 and 2.5), the Option shall become exercisable:
2.1.1. with respect to 20% of the Shares, on and after the first
anniversary of the Date of Grant;
2.1.2. with respect to an additional 20% of the Shares, on and after
the second anniversary of the Date of Grant;
2.1.3. with respect to an additional 20% of the Shares, on and after
the third anniversary of the Date of Grant;
2.1.4. with respect to an additional 20% of the Shares, on and after
the fourth anniversary of the Date of Grant; and
2.1.5. with respect to the remainder of the Shares, on and after the
fifth anniversary of the Date of Grant.
2.2. The unexercised portion of the Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
2.2.1. The tenth anniversary of the Date of Grant; or
2.2.2. Subject to the provisions of Sections 2.3, 2.4, 2.5 and 2.6
below, 30 days following the date of termination of Optionee's status as an
employee of the Company for any reason in the case of the vested portion of the
Option (or the date on which a portion of the Option vests pursuant to Section
2.5) and immediately following such date of termination in the case of the
unvested portion of the Option.
2.3. If Optionee's employment is terminated by the Company for Cause
(as defined in this Section 2.3), the Option (both vested and non-vested) shall
expire on the date of termination. For purposes of this section of this
Agreement, the term "Cause" shall mean any of the following:
(a) A willful failure of Optionee to perform his duties in any material
respect which failure is not cured by Optionee within 20 days following written
notice from the Company detailing such failure;
(b) Any willful misconduct by Optionee relating, directly or indirectly, to
the Company or any of its affiliates, which breach, if susceptible to cure, is
not cured by Optionee within 20 days following written notice from the Company
detailing such breach;
(c) Any breach by Optionee of any material provision contained in this
Agreement or any employment or consulting agreement between the Company and
Optionee, which breach, if susceptible to cure, is not cured by Optionee within
20 days following written notice from the Company detailing such breach; or
(d) Optionee's conviction of a felony or crime involving moral turpitude.
2.4. If Optionee terminates his employment for any reason (other than
for "Executive Cause", pursuant to the Employment Agreement dated as of May 26,
1998 between the Company and Optionee (the "Employment Agreement")), the Option
(both vested and non-vested) shall expire on the date of termination.
2.5. In the event that (i) either Optionee's employment with the
Company is terminated by the Company without Cause (as defined in Section 2.3)
or Optionee terminates his employment with the Company for "Executive Cause"
pursuant to the terms of the Employment Agreement and (ii) Optionee has
relocated, at the request of the Company, from his residence in the Atlanta,
Georgia area, the Option shall remain outstanding and continue to vest, and
shall otherwise be treated for purposes of this Agreement, as if Optionee
remained in the employ of the Company through the earlier of (a) the first
anniversary of the date of termination or (b) the occurrence of any circumstance
or event that would constitute Cause under Section 2.3 of this Agreement.
2.6 In the event that Optionee's employment is terminated (i) by the
Company because Optionee shall become ill, mentally or physically disabled, or
otherwise incapacitated so as to be unable to regularly perform the duties of
his position for a period in excess of 90 consecutive days or more than 120 days
in any consecutive 12 month period, or (ii) due to his death, the Option shall
remain outstanding and continue to vest, and shall otherwise be treated for the
purposes of the terms and conditions thereof, as if Optionee remained in the
employment of the Company through October 9, 2003.
2.7. Notwithstanding any other provision of this Agreement, the
Committee may determine that the Option shall become exercisable in full or in
part, whether or not it is then exercisable, upon such circumstances or events
as the Committee determines, in its sole discretion, merits special
consideration.
2.8 Notwithstanding anything to the contrary contained herein, in no
event shall the Option be exercisable after the expiration of ten years from the
Date of Grant.
3. Method of Exercise of Option. The Option may be exercised by
Optionee (or by Optionee's personal representatives or heirs at law, as provided
in Section 2, but by no other person) as to all or (at Optionee's election) part
of the Shares as to which the Option is then exercisable (that is, vested) under
Section 2 by giving written notice of exercise to the Company at its principal
business office, specifying the number of Shares for which the Option is
exercised, accompanied by payment in full for such Shares (as determined
pursuant to Section 4) together with any amount required for payroll withholding
tax under all applicable federal, state or local laws or regulations. The
failure to exercise the Option, in whole or in part, as to any vested exercise
rights shall not constitute a waiver of these rights. The Company shall cause
certificates for the Shares so purchased to be delivered to Optionee or
Optionee's personal representatives or heirs at law, at its principal business
office, against payment in full of the Option price for such Shares (as
determined pursuant to Section 4), as soon as practicable following receipt of
the notice of exercise and the applicable purchase price. The Option price shall
be paid in United States dollars in the form of cash, certified check or bank
draft, or (if the Shares of Common Stock of
the Company are then publicly traded) in fully paid Shares of Common Stock of
the Company, that have been held by the Optionee for a period of at least six
months (valued for this purpose at their then fair market value determined by
the Committee), consistent with practices permitted by the Committee or a
combination of the two.
4. Option Price. Subject to adjustment as provided in Section 9, the
purchase price of the Shares covered by this Agreement shall be $33.75 per
Share.
5. Non-Transferability of Option. The Option is not assignable or
transferable except by will or by the laws of descent and distribution and the
Option may not be exercised other than by the Optionee or, after the death of
the Optionee, by the Optionee's personal representative, heirs or legatees;
provided, however, that the Committee may, subject to such terms and conditions
as the Committee shall specify, permit the transfer of the Option to the
Optionee's family members or to one or more trusts established in whole or in
part for the benefit of one or more of such family members. Without limiting the
generality of the foregoing, the Option may not be assigned, transferred (except
as permitted in the preceding sentence), pledged or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to levy,
attachment or similar process. Any attempt to assign, transfer, pledge or
hypothecate the Option contrary to the provisions of this Agreement, and any
levy, attachment or similar process upon the Option shall be null and void and
without effect, and the Board or the Committee may, in its discretion, upon the
happening of any such event, terminate the Option as of the date of such event.
6. No Rights Prior to Issuance of Shares. The holder of the Option
shall not have any rights to dividends nor any other rights of a shareholder
with respect to the Shares covered by the Option until the Shares have been
issued (as evidenced by the appropriate entry on the books of the transfer agent
of the Company) following exercise of the Option prior to its termination.
7. Restrictions on Exercise and on Common Stock.
7.1. The Shares issued upon exercise of the Option shall be issued
only to Optionee or a person permitted to exercise the Option pursuant to
Section 2.3.
7.2. The Option shall not be exercisable, in whole or in part, until
such time as the Shares are registered by the Company on a Form S-8.
7.3. The Company may require the Optionee to represent to the Company,
in writing, when the Option is exercised, that the Optionee is exercising the
Option for the Optionee's own account for investment only and not with a view to
distribution and that the Optionee will not make any sale, transfer or other
disposition of any Shares purchased except (i) pursuant to a registration
statement filed under the Securities Act of 1933 as amended, which the
Securities and Exchange Commission has declared effective, (ii) pursuant to an
opinion of counsel satisfactory in form and substance to the Company that the
sale, transfer or other disposition may be made without registration, or (iii)
pursuant to a "no action" letter issued to the Optionee by the
Securities and Exchange Commission. The Company may require each share
certificate representing Shares to bear a legend stating that the Shares
evidenced thereby may not be sold or transferred except in compliance with the
Securities Act of 1933, as amended, and the provisions of this Agreement.
Notwithstanding anything contained herein to the contrary, the Option shall not
be exercisable at a time when the exercise thereof may result in the violation
of any law or governmental order or regulation.
8. Right to Terminate Employment. This Agreement does not constitute a
contract of, or an implied promise to continue, Optionee's employment or status
with the Company or any subsidiary of the Company; and nothing contained in this
Agreement shall confer upon Optionee the right to continue such employment or
status; nor does this Agreement affect the right of the Company to terminate
Optionee's employment at any time. Optionee shall have no rights in the benefits
conferred by the Option or in any Shares except to the extent the Option is
exercised while vested and prior to termination. Termination of the Option by
reason of rightful termination of employment shall give no rise for any claim
for damages by Optionee under this Agreement and shall be without prejudice to
any rights or remedies which the Company or any subsidiary of the Company may
have against Optionee.
9. Adjustment.
9.1. In the event of any subdivision (stock split) or consolidation
(reverse split) of the issued Common Stock of the Company, or any other
recapitalization of the Company, or any business combination or other
transaction involving the Company, which shall substantially affect the rights
of holders of Common Stock, the Board or the Committee shall make such
appropriate adjustments to the number of Shares and price per Share covered by
the Option, and any other rights under the Option, as deemed appropriate by the
Board or the Committee, as the case may be (whose good faith determination shall
be absolute and binding upon Optionee), to provide Optionee with a benefit
equivalent to that to which Optionee would have been entitled if such event had
not occurred; provided, however, that if, as a result of such event, the Common
Stock is no longer publicly traded, the Board or the Committee shall make such
appropriate adjustments to the unvested portion of the Option, as deemed
appropriate by the Board or the Committee, as the case may be (whose good faith
determination shall be absolute and binding upon Optionee), to provide Optionee
with a benefit equivalent to that to which Optionee would have been entitled if
Optionee would have had the right to exercise any unvested portion of the Option
immediately prior to such event. The Committee or the Board, as the case may be,
shall provide for appropriate adjustment of the Option in the event of stock
dividends or distributions of assets or securities of other companies owned by
the Company to stockholders relating to Common Stock for which the record date
is prior to the date the Shares purchased by exercise of the Option are issued
or transferred, except that no such adjustment shall be made for cash dividends
or stock dividends of 10% or less (cumulatively, in the aggregate).
9.2. In case the Company is merged or consolidated with another
corporation, or in case of a reorganization of the Company, the Board or the
board of directors of any corporation assuming the obligations of the Company
hereunder shall either (i) make appropriate provisions for the protection of any
outstanding portion of the Option by the substitution on an
equitable basis of appropriate securities of the Company, or appropriate
securities of the merged, consolidated, or otherwise reorganized corporation, or
the appropriate adjustment in the option price, or both, or (ii) give written
notice to the Optionee that his Option must be exercised, to the extent then
exercisable, within 60 days of the date of such notice or the Option will
terminate, and to the extent that the Option is not exercised within such 60-day
period it shall terminate and be of no further effect.
10. Taxes. If the Company shall be required to withhold any amounts by
reason of any federal, state or local tax rules or regulations in respect of the
payment of cash or the issuance of Shares pursuant to the exercise of an Option,
the Company shall be entitled to deduct and withhold such amounts from any cash
payments to be made to the Optionee. In any event, the Optionee shall either (i)
make available to the Company, promptly when requested by the Company,
sufficient funds to meet the requirements of such withholding, or (ii) to the
extent permitted by the Committee, irrevocably authorize the Company to withhold
from the Shares otherwise issuable to the Optionee as a result of such exercise
a number of Shares having a fair market value, as of the date the withholding
tax obligation arises (the "Tax Date") which alone, or when added to funds paid
to the Company by the Optionee, equal the amount of the minimum withholding tax
obligation (the "Withholding Election") and the Company shall be entitled to
take and authorize such steps as it may deem advisable in order to have such
funds made available to the Company out of any funds or property due or to
become due to the Optionee. An Optionee's Withholding Election may only be made
prior to the Tax Date and may be disapproved by the Committee. The Committee may
establish such rules and procedures as it may deem necessary or advisable in
connection with the withholding of taxes relating to the exercise of the Option.
11. Notices. Each notice relating to this Agreement shall be in
writing and delivered in person or by certified mail to the proper address. Each
notice to the Company shall be addressed to it at its principal office,
attention of the Chief Financial Officer, with a copy to the Company's General
Counsel. Each notice to Optionee (or other person or persons then entitled to
exercise the Option) shall be addressed to Optionee (or such other person or
persons) at Optionee's most recent address on the books of the Company. Anyone
to whom a notice may be given under this Agreement may designate a new address
by notice to that effect. Each notice shall be deemed to have been given on the
day it is received.
12. Benefits of Agreement. This Agreement shall inure to the benefit
of and be binding upon each successor of the Company. Rights granted to the
Company under this Agreement shall be binding upon Optionee's personal
representatives and heirs at law.
13. Source of Rights. This Agreement shall be the sole and exclusive
sources of any and all rights which Optionee, and Optionee's personal
representatives or heirs at law, may have in respect of the Option as granted
hereunder.
14. Captions. The captions contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
15. Interpretation and Construction. The Option shall be administered
by the Committee. The Committee shall have authority to interpret and construe
the terms of the Option, to make all determinations necessary or advisable for
the administration of the Option (including determinations relating to the
delivery of Shares of Common Stock in payment of the purchase price of the
Shares covered by the Option and any tax withholding obligations, subject to
compliance with any applicable rules promulgated under Section 16 of the
Exchange Act). The good faith interpretation and construction by the Board or by
the Committee of any provision of this Agreement shall be final and conclusive
and binding on the parties hereto.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same Agreement.
17. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New Jersey without regard to any
principles of conflict of laws.
EXECUTION
The parties signed this Agreement as of the day and year first above
written, whereupon it became binding in accordance with its terms.
SYNETIC, INC.
By:
Name: Xxxxxxx Xxxxx
Title: Executive Vice President
Finance and Administration
and Chief Financial Officer
Xxxxxxx Xxxxx
Address: ---------------------------
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