EXHIBIT O
DIGITAL FUSION, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made as of the 21st day of July 2005 between Digital
Fusion, Inc. ("DFI"), which has a principal place of business at 0000-X
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 and G. Xxxxxxx Xxxx ("Participant").
Capitalized terms in this Agreement not defined herein shall have the meanings
specified in the Digital Fusion, Inc. 2000 Stock Option Plan (the "Plan") unless
the context otherwise requires.
W I T N E S S E T H:
1. GRANT OF OPTIONS. DFI hereby grants to Participant as of
July 21, 2005 ("Date of Grant") Non-Qualified Stock Options ("Options") to
purchase 2,500 shares of Stock of DFI ("Shares") at $2.375 per Share ("Exercise
Price"), subject to the terms and conditions of the Plan and the terms and
conditions contained herein.
2. VESTING; FORFEITURE AND CANCELLATION; EXERCISABILITY.
(a) VESTING. With respect to the Options granted hereby, one hundred
percent (100%) shall vest and be exercisable by the Participant immediately.
Additionally, the Committee may, in its discretion, accelerate the period during
which Options vest and become exercisable.
(b) FORFEITURE AND CANCELLATION.
(i) Upon Participant's termination of service to or
employment by the Company, death or Disability, all non-vested Options shall be
forfeited. An individual who is providing services to or is employed by a
subsidiary or affiliate of DFI shall be deemed to have ceased providing such
services or ceased employment with the Company at such time as DFI and its
stockholders own either directly or indirectly less than 50% of the total
combined voting power of all classes of stock of such subsidiary or affiliate
which are entitled to vote.
(ii) The Committee may, in its sole discretion, in
cases involving activities by Participant which would constitute Cause (as
hereinafter defined), cancel Options held by Participant, whether or not vested,
in whole or in part.
(c) EXERCISE OF OPTIONS. Options shall not be exercisable until
vested. Except as otherwise set forth in the Plan and herein, an Option must in
all events be exercised on or before the tenth anniversary of the date of grant
of the Option. Vested Options shall only be exercisable by Participant while
Participant is in active service to or employment with the Company except: (i)
in the case of Participant's death, vested Options may be exercised by the
executor or administrator of Participant's estate or Participant's distributee
during the six month period commencing on the date of Participant's death; (ii)
Participant may exercise vested Options during the six month period commencing
on the date of his Disability; and (iii) Participant may exercise vested Options
during the three month period commencing on the date of Participant's
termination of service or employment by the Company for reasons other than for
Cause. For purposes hereof, Cause shall mean: (i) the disclosure or misuse of
confidential information or trade secrets; (ii) activities in violation of
Company policies; (iii) the violation or breach of any material provision in any
employment contract or agreement between Participant and the Company; (iv)
engaging in conduct relating to Participant's service or employment with the
Company for which either criminal or civil penalties may be sought; and (v)
engaging in activities which adversely affect or which are inimical, contrary or
harmful to the interests of the Company or its operations. In no event may
Options be exercised after the expiration date of the Options.
3. TRANSFER RESTRICTIONS. Except as set forth below,
Participant may not transfer the Options other than by will or the laws of
descent and distribution, and, during Participant's lifetime, the Options shall
be exercisable only by Participant. Notwithstanding the foregoing, Participant
may transfer the Options to (i) his or her spouse, children or grandchildren
(referred to herein as the Participant's "Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Family Members, or (iii) a partnership
in which such Family Members are the only partners. Any transfer pursuant to
this Section 4 shall be subject to the following: (a) there may be no
consideration for any such transfer and (b) a written option agreement pursuant
to which such Options are granted must be approved by the Committee and must
expressly provide for transferability in a manner consistent with this Section
4. Subsequent to the transfer: (i) the transferred Options shall continue to be
subject to the terms and conditions set forth herein and (ii) the term
"Participant" shall be deemed to refer to the transferee. The employment or
service requirement and the events of death, Disability and termination of
service or employment described in Section 2 hereof shall continue to apply with
respect to the original Participant, following which the Options shall be
exercisable by the transferee only to the extent and for the periods specified
in Section 2.
4. METHOD OF EXERCISE; RESTRICTION ON ISSUANCE; PAYMENT OF
EXERCISE PRICE.
(a) The Options shall be exercisable by written notice which shall
state Participant's election to exercise Options, the method of exercise, the
number of Shares in respect of which the Option is being exercised, and such
representations and agreements as to Participant's investment intent with
respect to such Shares as may be required by the Company. Such written notice
shall be signed by Participant and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be accompanied by
payment of the Exercise Price. Options shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of Options unless such
issuance and such exercise comply with all relevant provisions of law and the
requirements of any stock exchange or automated quotation system upon which the
Stock may then be listed or quoted.
(b) Payment of the Exercise Price for the number of Shares for which
Options are being exercised shall be made:
(i) in cash or by check;
(ii) by tender to the Company of unencumbered
shares of Stock owned by Participant having
a Fair Market Value, as determined by the
Committee, at least equal to the Exercise
Price; or
(iii) any combination of the foregoing.
5. RESTRICTIONS ON EXERCISE. Options may not be exercised if
the issuance of Shares upon such exercise would constitute a violation of any
applicable federal or state securities or other law or regulation. As a
condition to the exercise of an Option, the Company may require Participant to
make such representations and warranties to the Company as may in the Company's
discretion be required by applicable laws and regulations.
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6. ISSUANCE OF SHARES, FRACTIONAL SHARES. Upon the exercise of
an Option, in whole or in part, in the manner and within the time herein
provided, the Company shall issue and deliver to Participant the number of
Shares with respect to which the Option was exercised. In no event will the
Company be required to issue fractional Shares (or cash in lieu thereof) in
connection with the exercise of an Option.
7. PLAN. These Options are awarded pursuant to the Plan and
are subject to all of the terms and conditions of said Plan, which is hereby
incorporated herein by reference. Participant acknowledges that Participant has
received, read and understands the provisions of the Plan pursuant to which this
Agreement is issued and Participant hereby agrees to be bound by the terms and
conditions of the Plan.
8. WITHHOLDING TAXES. Participant hereby agrees that the
Company shall have the right to (i) withhold Shares in such an amount as is
sufficient to satisfy withholding of any federal, state or local tax
requirements arising as a result of the exercise of an Option or (ii) take such
other action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding shall be satisfied. The date the Option is exercised shall be the
date used for purposes of determining the Fair Market Value of the Shares used
to satisfy the required tax withholding. Participant further agrees that
Participant, upon demand from the Company, will reimburse the Company in cash
for any amounts underwithheld in connection with Participant's exercise of an
option.
9. EMPLOYMENT. Participation in the Plan shall not affect the
Company's right to discharge Participant or constitute an agreement of
employment between Participant and the Company.
10. NOTICES. All notices required or permitted to be given to
Participant hereunder shall be deemed to have been duly given when sent by
registered or certified mail, return receipt requested, to Participant's address
set forth on the signature page hereof or to such other address of which notice
shall have been given to the Company in accordance with this sentence.
11. BINDING EFFECT; SUCCESSORS AND ASSIGNS; AMENDMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties and their successors, assigns, heirs, executors and legal
representatives.
(b) This Agreement may not be modified, amended or changed, except by
a written instrument executed by the parties and except that the Company shall
have the right to amend this Agreement to make such changes as they deem
necessary or appropriate in good faith to include provisions relating to control
of the Company, such as "drag along" rights, "tag along" rights, "lock up" or
"holdback" provisions in connection with recapitalizations, reorganizations,
acquisitions, divestitures, debt financings and public offerings, and "voting
agreement" provisions, which the Company deems necessary or appropriate
reasonably and in good faith as its business grows so long as such changes or
provisions do not unfairly discriminate against Participant.
12. INTERPRETATION. Any dispute regarding the interpretation
of this Agreement shall be submitted by Participant or by the Company forthwith
to the Committee (or if no Committee is then in existence, to the Company's
Board of Directors), which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee (or the Board) shall
be final and binding on the Company and on Participant.
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13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Participant
shall have no rights as a stockholder with respect to Shares subject to this
Agreement until the Participant has exercised and fully paid for the Option in
accordance with the terms and conditions set forth herein and the Plan. Except
as is expressly provided in the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the date such stock
certificate is issued.
14. SEPARABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.
15. LAW GOVERNING. This Agreement shall be construed both as
to validity and performance in accordance with, and governed by, the law of the
State of Alabama (without regard to any rules or principles of conflicts of laws
that might look to any jurisdiction outside of Alabama).
16. NO WAIVER. No course of dealing and no delay on the part
of any party in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first hereinabove written.
DIGITAL FUSION, INC.
By: /S/ XXX X. XXXXXXX, III
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Xxx X. Xxxxxxx, III
Chief Executive Officer
PARTICIPANT
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Print Name
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Xxxxxx Xxxxxxx
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Xxxx, Xxxxx and Zip Code
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