THE MARKED PORTIONS OF THIS STOCK OPTION AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT STOCK OPTION AGREEMENT
|
REDACTED
–
AS
FILED
|
Exhibit
10.40
|
THE
MARKED PORTIONS OF THIS STOCK OPTION AGREEMENT HAVE
BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION
PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT
This
STOCK
OPTION AGREEMENT
(this
“Agreement”),
dated
as of August __, 2007 (the “Grant
Date”),
is
between Xxxxx X. Xxxxxx (the “Optionee”)
and
Advanced Communications Technologies, Inc., a Florida corporation (the
“Company”).
WHEREAS,
the
Optionee is an employee of the Company; and
WHEREAS,
the
Company desires to create an incentive for the Optionee to use his best efforts
in the performance of his duties to and for the benefit of the Company and
its
subsidiaries by granting him an option to purchase shares of the Company’s
Common Stock.
NOW,
THEREFORE,
the
Optionee and the Company hereby agree as follows:
1. Definitions.
For all
purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Base EBITDA Targets”
means
the Base EBITDA targets for the Company’s 2008, 2009 and 2010 fiscal years set
forth on Schedule 1
hereto;
provided, that if the Company or any of its subsidiaries in any fiscal year
enters into any extraordinary transaction, such as a business acquisition or
disposition, the Board in the exercise of its sole discretion may, at any time
during such fiscal year, adjust upward or downward any such target to take
into
account such extraordinary transaction.
“Board”
means
the Board of Directors of the Company.
“Cause”
has
the
meaning specified in the Employment Agreement.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Common
Stock”
means
the common stock of the Company, no par value.
“Company”
has
the
meaning specified in the preamble hereto.
“Consolidated Net Income”
means,
for any period, the net income (or loss) of the Company and its subsidiaries
for
such period on a consolidated basis, after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance with
generally accepted accounting principles consistently applied, after eliminating
all intercompany items, but excluding from the definition of Consolidated Net
Income any extraordinary gains and/or losses and any gains and/or losses from
the sale or other disposition of assets other than in the ordinary course of
business, all determined in accordance with generally accepted accounting
principles consistently applied.
“EBITDA”
means,
with respect to any fiscal year, the sum of the Consolidated Net Income (as
defined in the Employment Agreement) (or loss) of the Company and its
subsidiaries for such fiscal year, calculated in accordance with generally
accepted accounting principles consistently applied but excluding any
extraordinary items of income, plus
all
amounts deducted in the computation thereof on account of (a) interest expense
(net of any interest income), (b) income taxes, (c) depreciation and
amortization, (d) charges for stock-based compensation, (e) implementation
expenses for Xxxxxxxx-Xxxxx compliance not to exceed $150,000, (f) expenses
incurred to file a Demand Registration Statement on behalf of Investor
Stockholders, as defined in that certain Registration Rights Agreement dated
August __, 2007; and (h) H.I.G. Capital L.L.C. management fees accrued or paid
during such fiscal year.
“Employment Agreement”
means
the Employment Agreement, dated as of the date hereof, between the Grantee
and
the Company.
“Exercise Price”
has
the
meaning specified in Section 2 hereof.
“Family Trust”:
means,
with respect to any individual, any trust created for the benefit of one or
more
of such individual’s Related Persons and controlled by such individual or one or
more Related Persons.
“Grant
Date”
has
the
meaning specified in the preamble hereto.
“Good
Reason”
has
the
meaning specified in the Employment Agreement.
“Option”
has
the
meaning specified in Section 2 hereof.
“Optionee”
has
the
meaning specified in the preamble hereto.
“Optioned
Shares”
has
the
meaning specified in Section 2 hereof.
“Plan”
means
the Company’s 2007 Amended and Restated Stock Plan attached hereto as
Exhibit
A.
“Related Persons”:
means,
with respect to any individual, such individual’s parents, spouse, children and
grandchildren.
“Termination
Date”
has
the
meaning specified in Section 4(a) hereof.
“Vested Optioned Shares”
has
the
meaning specified in Section 5 below.
2. Grant
of Option.
(a) Subject
to the terms and conditions set forth herein and pursuant to the Plan, the
Company grants to the Optionee an option (the “Option”)
to
purchase from the Company all or any part of (i) 2,497,877,348 shares of Common
Stock hereof the “Tenured
Optioned Shares”),
at a
price of $.00075 per Tenured Optioned Share (the “Exercise
Price”)
and
(ii) 1,498,726,409 shares of Common Stock (the “Performance
Optioned Shares”,
and
together with the Tenured Option Shares, the “Optioned
Shares”)
at a
price per Performance Optioned Share equal to the Exercise Price.
(b) Anything
in this Agreement to the contrary notwithstanding, the Option is subject to
and
entirely contingent upon an amendment to the Articles of Incorporation of the
Company (the “Charter
Amendment”)
to
increase the authorized number of shares of Common Stock to an amount sufficient
for the grant of restricted stock and options in the maximum number contemplated
by the Plan, which Charter Amendment is subject to the approval of the
stockholders of the Company.
3. Character
of Option.
This
Option is not intended to qualify as an incentive option under Section 422
of
the Code.
4. Duration
of Option.
The
Option shall terminate in its entirety on the earliest of (i) the tenth (10th)
anniversary of the Grant Date or (ii) such earlier time as the Option may
terminate in accordance with the Plan.
5. Exercise
of Option.
(a) At
any
time after the
approval of the Charter Amendment and the effective filing thereof with the
Florida Department of State, and
prior to
the termination of the Option pursuant to Section 4 above, the Optionee shall
have the right to exercise the Option for all or a portion of the Optioned
Shares which have become “Vested Optioned Shares”
as
of
the date of exercise determined in accordance with this paragraph
(a):
(i) Initially,
999,150,939 of the Tenured Optioned Shares shall be considered Vested Optioned
Shares. One twelfth (1/12th) of the remaining 1,498,726,409 Tenured Optioned
Shares shall become “Vested Optioned Shares” upon the expiration of each three
(3) month period after the Grant Date, such that all of the Tenured Optioned
Shares shall be Vested Optioned Shares as of and after the third anniversary
of
the Grant Date, if the Option has not terminated prior to such
date.
(ii) Initially,
none of the Performance Optioned Shares shall be considered Vested Optioned
Shares. In the event that a Base EBITDA Target is met or exceeded for a given
fiscal year, one
third
(1/3rd) of the original number of Performance Optioned Shares
shall
become “Vested Optioned Shares” upon the completion of the Company’s audited
financial statements for such year demonstrating that such Base EBITDA Target
has been met or exceeded for such year. In the event that a Base EBITDA Target
is not met for either the 2008 or the 2009 fiscal year, such one third (1/3rd)
of the original number of Performance Optioned Shares shall not become Vested
Optioned Shares unless and until the Company meets the Base EBITDA Target for
the following fiscal year.
(iii) Upon
the
occurrence of any Change of Control (as defined in the Plan) or any termination
by the Company of the Optionee’s employment with the Company without Cause (as
defined in the Plan) or by the Executive for Good Reason, all
of
the Tenured Optioned Shares that are not then vested shall become Vested
Optioned Shares.
(iv) Notwithstanding
the foregoing, in no event shall any Optioned Shares which have not already
become Vested Optioned Shares become Vested Optioned Shares after the
termination of the Optionee’s employment with the Company for any
reason.
(b) Subject
to Section 4 hereof, exercise of the Option may be effected in the manner
specified in Section 6 of the Plan.
6. Transfer
of Option.
During
the Grantee’s lifetime, the Option may be exercised only by the Grantee. Except
for a transfer of the Option to the Grantee’s Related Persons or Family Trust by
will or operation of law after the Grantee’s death, the Option and all rights
granted hereunder may not be transferred, assigned, pledged, or hypothecated
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment, or similar process. Any transfer of the Option in
violation of this Section 6 shall be void and will result in the immediate
termination of the Option.
7. Incorporation
of Plan Terms.
This
Option is granted subject to all of the applicable terms and provisions of
the
Plan.
8. Limitation
of Rights in Optioned Shares.
The
Optionee shall not be deemed for any purpose to be a stockholder of the Company
with respect to any of the Optioned Shares except to the extent that the Option
shall have been exercised with respect thereto and, in addition, a stock
certificate therefor shall have been delivered to the Optionee.
9. Communication.
All
notices, demands and other communications hereunder shall be in writing or
by
written telecommunication, and shall be deemed to have been duly given if
delivered personally or if mailed by certified mail, return receipt requested,
postage prepaid, or if sent by overnight courier, or sent by written
telecommunication, as follows:
(a) if
to an
Optionee, at such address set forth after Optionee’s name on the signature page
hereto; and
(b) if
to the
Company, at:
Advanced
Communications Technologies, Inc.
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
000.000.0000
Attention:
CEO
Any
such
notice shall be effective (i) if delivered personally, when received, (ii)
if
sent by overnight courier, when receipted for, (iii) if mailed, five (5) days
after being mailed as described above and (iv) if sent by written
telecommunication, when dispatched.
10. Governing
Law.
This
Agreement and the obligations of the parties hereunder shall be deemed to be
a
contract under seal and shall for all purposes be governed by and construed
in
accordance with the internal laws of the State of New York without reference
to
principles of conflicts of law.
11. Successors
and Assigns.
This
Agreement shall be binding upon any successor or assign of either the Company
or
the Optionee, and upon any executor, administrator, trustee, guardian, or other
legal representative of the Optionee.
{Remainder
of Page Intentionally Left Blank.}
IN
WITNESS WHEREOF,
the
parties have executed this Stock Option Agreement as of the date and year first
above written.
|
ADVANCED
COMMUNICATIONS
TECHNOLOGIES,
INC.
|
||
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
|
|
Title:
|
Director/Chair,
Compensation Committee
|
|
|
THE
OPTIONEE:
|
||
|
/s/
Xxxxx X. Xxxxxx
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
|
|
Address:
|
||
Schedule
1
Base
EBITDA Targets
|
Fiscal
Year
|
EBITDA
Target
|
|
|
2008
|
$[REDACTED]
|
|
|
2009
|
$[REDACTED]
|
|
|
2010
|
$[REDACTED]
|
Exhibit
A
Amended
2007 Stock Plan
