EXHIBIT 4.2
ESSEX CORPORATION
FORM OF NON PLAN STOCK OPTION AGREEMENTS
ESSEX CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") is made as
of the 28th day of February 2003 (the "CONVERSION DATE"), by and between Essex
Corporation, a Maryland corporation ("ESSEX"), and ("NAME"), a "State" resident
(the "Optionee").
WHEREAS, Essex has acquired Sensys Development Laboratories, Inc.
("SDL") in a merger (the "MERGER") pursuant to an Agreement and Plan of Merger
(the "PLAN");
WHEREAS, prior to the Merger the Optionee held options exercisable for
("OLD_AMOUNT") shares of common stock of SDL at an exercise price of
("OLD_PRICE") per share;
WHEREAS, The Plan provides that outstanding options to purchase SDL
capital stock shall be converted into options to purchase Common Stock of Essex;
and
WHEREAS, pursuant to the Plan the Board of Directors of Essex (the
"BOARD") has granted to the Optionee a Non-Qualified Stock Option to acquire
shares of the Company's common stock, no par value per share (the "COMMON
STOCK"), as set forth below and subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual undertakings and
obligations of the parties herein and other good and valuable consideration, the
parties hereby agree as follows:
1. GRANT OF OPTION. Essex hereby grants to Optionee an option (the
"Option") to purchase an aggregate of ("NEW_AMOUNT") shares of Common Stock at
an exercise price of ("NEW_PRICE") per share on the terms and conditions set
forth below.
2. NON-QUALIFIED STOCK OPTION. This Option is NOT intended to qualify
as a Incentive Stock Option within the meaning of Section 424 of the Internal
Revenue Code (i.e., this Option shall be a Non-Qualified Option).
3. VESTING AND EXERCISE OF OPTION.
(a) VESTING AND EXERCISE. This Option is fully vested and may
be exercised, in whole or in part, at any time beginning on the Conversion Date
and, subject to Section 5 hereof, prior to ("EXPIRE") (the "Expiration Date").
(b) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this Option shall be exercised by the Optionee's delivery of the
notice of exercise attached hereto as EXHIBIT A (the "Exercise Notice") to the
Secretary or Assistant Secretary of Essex, specifying the number of shares to be
purchased and accompanied by payment in full in accordance with Section 4. Such
exercise shall be effective upon receipt by Essex of the Exercise Notice
together
1
with the required payment. The Optionee may purchase less than the number of
shares covered hereby, provided that no partial exercise of this Option may be
for fewer than fifty (50) shares unless there are fewer than fifty (50) shares
remaining subject to the Option.
4. PAYMENT OF PURCHASE PRICE. Payment of the purchase price upon
exercise of the Option shall be made (i) by delivery to Essex of cash or a check
to the order of Essex in an amount equal to the purchase price of such shares
plus any federal, state or local tax withholding obligation, (ii) by any other
means which the Board determines are consistent with applicable laws and
regulations (including, without limitation, the provisions of Rule 16b-3 under
the Exchange Act and Regulation T promulgated by the Federal Reserve Board), or
(iii) by any combination of such approved methods of payment.
5. TERMINATION OF OPTION.
(a) TERMINATION OF EMPLOYMENT. If the Optionee's employment
with Essex or a subsidiary of Essex terminates other than as a result of "Cause"
under section 5(b) below, including as a result of death, retirement or
disability, then Optionee, or in the case of Optionee's death, the Optionee's
beneficiary or personal representative, may exercise this Option for a period of
one year after such termination of employment, after which time this Option
shall terminate and Optionee shall have no further rights hereunder.
(b) TERMINATION FOR "CAUSE". If the Optionee is employed by
Essex or a subsidiary of Essex and is terminated by Essex or such subsidiary for
Cause (as defined below) at any time during the term of this Option, then this
Option shall automatically terminate and Optionee shall have no further rights
hereunder. "CAUSE" shall mean acts of gross or willful negligence or misconduct
committed in connection with Essex's business, or criminal acts of moral
turpitude committed in connection with Essex's business. Cause shall be
determined in good faith by the affirmative vote of a majority of the entire
Board.
6. DEATH PRIOR TO EXERCISE OF OPTION. If the Optionee dies, the
Optionee's beneficiary or personal representative shall have the right to
exercise such Option at any time prior to the Expiration Date.
7. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.
(a) GENERAL. Essex shall, upon payment of the purchase price
for the number of shares purchased, make prompt delivery of such shares to the
Optionee, PROVIDED THAT if any law or regulation requires Essex to take any
action with respect to such shares before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to complete
such action.
(b) LISTING, QUALIFICATION, ETC. This Option shall be subject
to the requirement that if, at any time, counsel to Essex shall determine that
the listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state of federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in
2
connection with, the issuance or purchase of shares thereunder, this Option may
not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, disclosure or satisfaction of such other
condition shall have been effected or obtained on terms acceptable to the Board.
Nothing herein shall be deemed to require Essex to apply for, effect or obtain
such listing, registration, qualification, or disclosure, or to satisfy such
other condition.
8. NON-TRANSFERABILITY OF OPTION. Except as provided in Section 6, this
Option is personal and no rights granted hereunder may be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
nor shall any such rights be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or such rights contrary to the provisions hereof; or upon
the levy of any attachment or similar process upon this Option or such rights,
this Options and such rights shall, at the election of Essex, become null and
void.
9. NO EMPLOYMENT RIGHTS. Nothing contained in this Option shall be
construed or deemed by any person under any circumstances to bind Essex to
employ the Optionee or continue the employment of the Optionee for any period.
10. NO RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this Option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the records date is prior to the date such stock certificate is issued.
11. ESSEX'S RIGHTS. The existence of this Option shall not affect in
any way the right or power of Essex or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Essex's capital structure, or its business, or any merger or consolidation of
Essex, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common Stock
or rights thereof, or dissolution or liquidation of Essex, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
12. RECAPITALIZATION. If the outstanding shares of the class then
subject to this Option are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made in
the number and/or kind of shares or securities for which the unexercised
portions of this Option may thereafter be exercised, all without any change in
the aggregate exercise price applicable to the unexercised portions of this
Option, but with a corresponding adjustment in the exercise price per share or
other unit.
13. WITHHOLDING TAXES. Essex's obligation to deliver shares upon the
exercise of this Option shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.
3
14. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Optionee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this Option
shall be acquired for the
Optionee's account for investment only and not with a view to, or for sale in
connection with, any distribution of the shares in violation of the Securities
Act of 1933 (the "Securities Act") or any rule or regulation under the
Securities Act.
(ii) The Optionee has had such opportunity as he or
she has deemed adequate to
obtain from representatives of Essex such information as is necessary to permit
the Optionee to evaluate the merits and risks of this Option.
(iii) The Optionee is able to bear the economic risk
of holding shares acquired
pursuant to the exercise of this Option for an indefinite period.
(iv) The Optionee understands that (A) the shares
acquired pursuant to the exercise
of this Option have not be registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act;
(B) such shares cannot be sold, transferred or otherwise disposed of unless they
are subsequently registered under the Securities Act or an exemption from
registration is then available; (C) in any event an exemption from registration
under Rule 144 or otherwise under the Securities Act may not be available for at
least one year and even then will not be available unless a public market then
exists for the Common Stock, adequate information concerning Essex is then
available to the public and other terms and conditions of Rule 144 are complied
with; and (D) Essex has no obligation to register any shares acquired pursuant
to the exercise of this Option under the Securities Act or under any state
securities or Blue Sky laws.
By making payment upon exercise of this Option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the representations
made in this Section 14.
(b) LEGENDS ON STOCK CERTIFICATES. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
Option shall have affixed thereto legends substantially in the following form,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred,
sold or otherwise disposed of in the absence of an effective
registration statement with respect to the shares evidenced by this
certificate, filed and made effective under the Securities Act of 1933,
or an opinion of counsel satisfactory to Essex to the effect that
registration under such Act is not required."
4
15. MISCELLANEOUS.
(a) Except as provided herein, this Option may not be amended
or otherwise modified unless evidenced in writing and signed by Essex and the
Optionee.
(b) All notices, requests, consents, and other communications
under this Option shall be in writing and shall be delivered by mail or hand
delivery as set forth below:
(i) if to Essex, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Secretary, or at such other address or addresses as may have
been furnished in writing by Essex to the Optionee; or
(ii) if to Optionee, at the address set forth in
below or at such other address or
addresses as may have been furnished to Essex in writing by the Optionee.
(c) This Option shall be governed by and construed in
accordance with the laws of the State of Maryland.
ESSEX CORPORATION
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
5
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof.
OPTIONEE
-----------------------------------
Name: ("NAME")
-----------------------------------
Address:
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
6
EXHIBIT A
NON-QUALIFIED STOCK OPTION AGREEMENT
Exercise Notice
At this time, I wish to purchase _____ shares of the Common Stock of
Essex Corporation through the exercise of the Option granted to me pursuant to
the Non-Qualified Stock Option Agreement dated February 28, 2003.
Please issue the Common Stock in the following manner and mail the
certificate(s) to the following address:
-----------------------------------
Name
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
Very truly yours,
-------------------------------------
Signature
("NAME")
-------------------------------------
Optionee's Name
1
ESSEX CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") is made as
of the 28th day of February 2003 (the "CONVERSION DATE"), by and between Essex
Corporation, a Maryland corporation ("ESSEX"), and ("NAME") a "State" resident
(the "Optionee").
WHEREAS, Essex has acquired Sensys Development Laboratories, Inc.
("SDL") in a merger (the "MERGER") pursuant to an Agreement and Plan of Merger
(the "PLAN");
WHEREAS, prior to the Merger the Optionee held options exercisable for
("OLD_AMOUNT") shares of common stock of SDL at an exercise price of
("OLD_PRICE") per share;
WHEREAS, The Plan provides that outstanding options to purchase SDL
capital stock shall be converted into options to purchase Common Stock of Essex;
and
WHEREAS, pursuant to the Plan the Board of Directors of Essex (the
"BOARD") has granted to the Optionee a Non-Qualified Stock Option to acquire
shares of the Company's common stock, no par value per share (the "COMMON
STOCK"), as set forth below and subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual undertakings and
obligations of the parties herein and other good and valuable consideration, the
parties hereby agree as follows:
1. GRANT OF OPTION. Essex hereby grants to Optionee an option (the
"Option") to purchase an aggregate of ("NEW_AMOUNT") shares of Common Stock at
an exercise price of ("NEW_PRICE") per share on the terms and conditions set
forth below.
2. NON-QUALIFIED STOCK OPTION. This Option is NOT intended to qualify
as an Incentive Stock Option within the meaning of Section 424 of the Internal
Revenue Code (i.e., this Option shall be a Non-Qualified Option).
3. VESTING AND EXERCISE OF OPTION.
(a) VESTING AND EXERCISE. This Option is fully vested and may
be exercised, in whole or in part, at any time beginning on the Conversion Date
and ending on one year from Merger date (the "Expiration Date").
(b) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this Option shall be exercised by the Optionee's delivery of the
notice of exercise attached hereto as EXHIBIT A (the "Exercise Notice") to the
Secretary or Assistant Secretary of Essex, specifying the number of shares to be
purchased and accompanied by payment in full in accordance with Section 4. Such
exercise shall be effective upon receipt by Essex of the Exercise Notice
together with the required payment. The Optionee may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
Option may be for fewer than fifty (50) shares unless there are fewer than fifty
(50) shares remaining subject to the Option.
4. PAYMENT OF PURCHASE PRICE. Payment of the purchase price upon
exercise of the Option shall be made (i) by delivery to Essex of cash or a check
to the order of Essex in an amount equal to the purchase price of such shares
plus any federal, state or local tax withholding
1
obligation, (ii) by any other means which the Board determines are consistent
with applicable laws and regulations (including, without limitation, the
provisions of Rule 16b-3 under the Exchange Act and Regulation T promulgated by
the Federal Reserve Board), or (iii) by any combination of such approved methods
of payment.
5. DEATH PRIOR TO EXERCISE OF OPTION. If the Optionee dies, the
Optionee's beneficiary or personal representative shall have the right to
exercise such Option at any time prior to the Expiration Date.
6. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.
(a) GENERAL. Essex shall, upon payment of the purchase price
for the number of shares purchased, make prompt delivery of such shares to the
Optionee, PROVIDED THAT if any law or regulation requires Essex to take any
action with respect to such shares before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to complete
such action.
(b) LISTING, QUALIFICATION, ETC. This Option shall be subject
to the requirement that if, at any time, counsel to Essex shall determine that
the listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state of federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, this Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board. Nothing herein shall be deemed to require Essex
to apply for, effect or obtain such listing, registration, qualification, or
disclosure, or to satisfy such other condition.
7. NON-TRANSFERABILITY OF OPTION. Except as provided in Section 5, this
Option is personal and no rights granted hereunder may be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
nor shall any such rights be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or such rights contrary to the provisions hereof; or upon
the levy of any attachment or similar process upon this Option or such rights,
this Options and such rights shall, at the election of Essex, become null and
void.
8. NO EMPLOYMENT RIGHTS. Nothing contained in this Option shall be
construed or deemed by any person under any circumstances to bind Essex to
employ the Optionee or continue the employment of the Optionee for any period.
9. NO RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this Option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the records date is prior to the date such stock certificate is issued.
10. ESSEX'S RIGHTS. The existence of this Option shall not affect in
any way the right or power of Essex or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Essex's capital structure, or its business, or any merger or consolidation of
Essex, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common Stock
or rights thereof, or dissolution or liquidation of Essex, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
2
11. RECAPITALIZATION. If the outstanding shares of the class then
subject to this Option are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made in
the number and/or kind of shares or securities for which the unexercised
portions of this Option may thereafter be exercised, all without any change in
the aggregate exercise price applicable to the unexercised portions of this
Option, but with a corresponding adjustment in the exercise price per share or
other unit.
12. WITHHOLDING TAXES. Essex's obligation to deliver shares upon the
exercise of this Option shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.
13. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Optionee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this Option
shall be acquired for the
Optionee's account for investment only and not with a view to, or for sale in
connection with, any distribution of the shares in violation of the Securities
Act of 1933 (the "Securities Act") or any rule or regulation under the
Securities Act.
(ii) The Optionee has had such opportunity as he or
she has deemed adequate to
obtain from representatives of Essex such information as is necessary to permit
the Optionee to evaluate the merits and risks of this Option.
(iii) The Optionee is able to bear the economic risk
of holding shares acquired
pursuant to the exercise of this Option for an indefinite period.
(iv) The Optionee understands that (A) the shares
acquired pursuant to the exercise
of this Option have not be registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act;
(B) such shares cannot be sold, transferred or otherwise disposed of unless they
are subsequently registered under the Securities Act or an exemption from
registration is then available; (C) in any event an exemption from registration
under Rule 144 or otherwise under the Securities Act may not be available for at
least one year and even then will not be available unless a public market then
exists for the Common Stock, adequate information concerning Essex is then
available to the public and other terms and conditions of Rule 144 are complied
with; and (D) Essex has no obligation to register any shares acquired pursuant
to the exercise of this Option under the Securities Act or under any state
securities or Blue Sky laws.
By making payment upon exercise of this Option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 13.
(b) LEGENDS ON STOCK CERTIFICATES. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
Option shall have affixed thereto legends substantially in the following form,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred,
sold or otherwise disposed of in the absence of an effective
registration statement with respect to the shares evidenced by this
certificate, filed and made effective under the Securities Act of
3
1933, or an opinion of counsel satisfactory to Essex to the effect
that registration under such Act is not required."
14. MISCELLANEOUS.
(a) Except as provided herein, this Option may not be amended
or otherwise modified unless evidenced in writing and signed by Essex and the
Optionee.
(b) All notices, requests, consents, and other communications
under this Option shall be in writing and shall be delivered by mail or hand
delivery as set forth below:
(i) if to Essex, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Secretary, or at such other address or addresses as may have
been furnished in writing by Essex to the Optionee; or
(ii) if to Optionee, at the address set forth in
below or at such other address or addresses as may have been furnished to Essex
in writing by the Optionee.
(c) This Option shall be governed by and construed in
accordance with the laws of the State of Maryland.
ESSEX CORPORATION
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
4
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof.
OPTIONEE
-----------------------------------
Name:("NAME")
-----------------------------------
Address:
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
5
EXHIBIT A
NON-QUALIFIED STOCK OPTION AGREEMENT
Exercise Notice
At this time, I wish to purchase _____ shares of the Common Stock of
Essex Corporation through the exercise of the Option granted to me pursuant to
the Non-Qualified Stock Option Agreement dated February 28, 2003.
Please issue the Common Stock in the following manner and mail the
certificate(s) to the following address:
-----------------------------------
Name
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
Very truly yours,
-----------------------------------
Signature
("NAME")
-----------------------------------
Optionee's Name
1
ESSEX CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") is made as
of the 28th day of February 2003 (the "CONVERSION DATE"), by and between Essex
Corporation, a Maryland corporation ("ESSEX"), and "Name", a "State" resident
(the "Optionee").
WHEREAS, Essex has acquired Sensys Development Laboratories, Inc.
("SDL") in a merger (the "MERGER") pursuant to an Agreement and Plan of Merger
(the "PLAN");
WHEREAS, prior to the Merger the Optionee held options exercisable for
"Number" shares of common stock of SDL at an exercise price of "$" per share;
WHEREAS, the Plan provides that outstanding options to purchase SDL
capital stock shall be converted into options to purchase Common Stock of Essex;
and
WHEREAS, pursuant to the Plan the Board of Directors of Essex (the
"BOARD") has granted to the Optionee a Non-Qualified Stock Option to acquire
shares of the Company's common stock, no par value per share (the "COMMON
STOCK"), as determined in Section 3 below and subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual undertakings and
obligations of the parties herein and other good and valuable consideration, the
parties hereby agree as follows:
1. GRANT OF OPTION. Essex hereby grants to Optionee an option (the
"Option") to purchase shares of Common Stock on the terms and conditions set
forth below.
2. NON-QUALIFIED STOCK OPTION. This Option is NOT intended to qualify
as a Incentive Stock Option within the meaning of Section 424 of the Internal
Revenue Code (i.e., this Option shall be a Non-Qualified Option).
3. NUMBER OF SHARES SUBJECT TO OPTION; EXERCISE PRICE.
(a) The number of shares of Common Stock subject to this
Option ("OPTION SHARES") and the exercise price per share (the "Exercise Price")
shall be determined on the first anniversary of the Conversion Date based on the
following formula:
--------------- ---------------------- ----------------- ------------------
Option Shares = Conversion Ratio multiplied by "Number"
--------------- ---------------------- ----------------- ------------------
For purposes of this Section 3 the following definitions shall apply:
"CONVERSION RATIO" means the quotient obtained by dividing the
Option Factor by the Determination Price.
1
"DETERMINATION PRICE" means the weighted average closing price
of the Common Stock during the Pricing Period; PROVIDED, HOWEVER, that
notwithstanding the actual twenty (20) day weighted average closing price per
share, the Determination Price shall not be greater than $7.00 nor less than
$3.09 per share.
"EXERCISE FACTOR" means "Dollars".
"OPTION FACTOR" means 4.590665.
"PRICING PERIOD" means the twenty (20) trading days
immediately preceding the first anniversary of the Conversion Date.
SCHEDULE A attached hereto and incorporated by reference
herein illustrates the number of shares of Common Stock for which the Option
will be exercisable (rounded to the nearest whole share) based on different
Determination Prices.
(b) The exercise price per share of the Option (the "EXERCISE
PRICE") shall be the quotient determined by dividing the Exercise Factor by the
number of Option Shares (determined as provided in Section 3(a)) as illustrated
on SCHEDULE A.
4. VESTING AND EXERCISE OF OPTION.
(a) VESTING AND EXERCISE. This Option is fully vested and may
be exercised, in whole or in part, at any time beginning on the first
anniversary of the Conversion Date and, subject to Section 6 hereof, prior to
"Date" (the "Expiration Date").
(b) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this Option shall be exercised by the Optionee's delivery of the
notice of exercise attached hereto as EXHIBIT A (the "Exercise Notice") to the
Secretary or Assistant Secretary of Essex, specifying the number of shares to be
purchased and accompanied by payment in full in accordance with Section 5. Such
exercise shall be effective upon receipt by Essex of the Exercise Notice
together with the required payment. The Optionee may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
Option may be for fewer than fifty (50) shares unless there are fewer than fifty
(50) shares remaining subject to the Option.
5. PAYMENT OF PURCHASE PRICE. Payment of the purchase price upon
exercise of the Option shall be made (i) by delivery to Essex of cash or a check
to the order of Essex in an amount equal to the purchase price of such shares
plus any federal, state or local tax withholding obligation, (ii) by any other
means which the Board determines are consistent with applicable laws and
regulations (including, without limitation, the provisions of Rule 16b-3 under
the Exchange Act and Regulation T promulgated by the Federal Reserve Board), or
(iii) by any combination of such approved methods of payment.
6. TERMINATION OF OPTION.
(a) TERMINATION OF EMPLOYMENT. If the Optionee's employment
with
Essex or a subsidiary of Essex terminates other than as a result of "Cause"
under section 6(b) below, including as a result of death, retirement or
disability, then Optionee, or in the case of
2
Optionee's death, the Optionee's beneficiary or personal representative, may
exercise this Option for a period of one year after such termination of
employment, after which time this Option shall terminate and Optionee shall have
no further rights hereunder.
(b) TERMINATION FOR "CAUSE". If the Optionee is employed by
Essex or a subsidiary of Essex and is terminated by Essex or such subsidiary for
Cause (as defined below) at any time during the term of this Option, then this
Option shall automatically terminate and Optionee shall have no further rights
hereunder. "CAUSE" shall mean acts of gross or willful negligence or misconduct
committed in connection with Essex's business, or criminal acts of moral
turpitude committed in connection with Essex's business. Cause shall be
determined in good faith by the affirmative vote of a majority of the entire
Board.
7. DEATH PRIOR TO EXERCISE OF OPTION. If the Optionee dies, the
Optionee's beneficiary or personal representative shall have the right to
exercise such Option at any time prior to the Expiration Date.
8. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.
(a) GENERAL. Essex shall, upon payment of the purchase price
for the number of shares purchased, make prompt delivery of such shares to the
Optionee, PROVIDED THAT if any law or regulation requires Essex to take any
action with respect to such shares before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to complete
such action.
(b) LISTING, QUALIFICATION, ETC. This Option shall be subject
to the requirement that if, at any time, counsel to Essex shall determine that
the listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state of federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, this Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board. Nothing herein shall be deemed to require Essex
to apply for, effect or obtain such listing, registration, qualification, or
disclosure, or to satisfy such other condition.
9. NON-TRANSFERABILITY OF OPTION. Except as provided in Section 7, this
Option is personal and no rights granted hereunder may be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
nor shall any such rights be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or such rights contrary to the provisions hereof; or upon
the levy of any attachment or similar process upon this Option or such rights,
this Options and such rights shall, at the election of Essex, become null and
void.
10. NO EMPLOYMENT RIGHTS. Nothing contained in this Option shall be
construed or deemed by any person under any circumstances to bind Essex to
employ the Optionee or continue the employment of the Optionee for any period.
11. NO RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this Option (including, without
3
limitation, any rights to receive dividends or non-cash distributions with
respect to such shares) unless and until a certificate representing such shares
is duly issued and delivered to the Optionee. No adjustment shall be made for
dividends or other rights for which the records date is prior to the date such
stock certificate is issued.
12. ESSEX'S RIGHTS. The existence of this Option shall not affect in
any way the right or power of Essex or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Essex's capital structure, or its business, or any merger or consolidation of
Essex, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common Stock
or rights thereof, or dissolution or liquidation of Essex, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
13. RECAPITALIZATION. If the outstanding shares of the class then
subject to this Option are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made in
the number and/or kind of shares or securities for which the unexercised
portions of this Option may thereafter be exercised, all without any change in
the aggregate exercise price applicable to the unexercised portions of this
Option, but with a corresponding adjustment in the exercise price per share or
other unit.
14. WITHHOLDING TAXES. Essex's obligation to deliver shares upon the
exercise of this Option shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.
15. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Optionee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this Option
shall be acquired for the Optionee's account for investment only and not with
a view to, or for sale in connection with, any distribution of the shares in
violation of the Securities Act of 1933 (the "Securities Act") or any rule or
regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he or
she has deemed adequate to obtain from representatives of Essex such
information as is necessary to permit the Optionee to evaluate the merits and
risks of this Option.
(iii) The Optionee is able to bear the economic risk
of holding shares acquired
pursuant to the exercise of this Option for an indefinite period.
(iv) The Optionee understands that (A) the shares
acquired pursuant to the exercise of this Option have not be registered under
the Securities Act and are "restricted securities" within the meaning of Rule
144 under the Securities Act; (B) such shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (C) in any
event an exemption from registration under Rule 144 or otherwise under the
Securities Act may not be available for
4
at least one year and even then will not be available unless a public market
then exists for the Common Stock, adequate information concerning Essex is then
available to the public and other terms and conditions of Rule 144 are complied
with; and (D) Essex has no obligation to register any shares acquired pursuant
to the exercise of this Option under the Securities Act or under any state
securities or Blue Sky laws.
By making payment upon exercise of this Option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 15.
(b) LEGENDS ON STOCK CERTIFICATES. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
Option shall have affixed thereto legends substantially in the following form,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred,
sold or otherwise disposed of in the absence of an effective
registration statement with respect to the shares evidenced by this
certificate, filed and made effective under the Securities Act of 1933,
or an opinion of counsel satisfactory to Essex to the effect that
registration under such Act is not required."
16. MISCELLANEOUS.
(a) Except as provided herein, this Option may not be amended
or otherwise modified unless evidenced in writing and signed by Essex and the
Optionee.
(b) All notices, requests, consents, and other communications
under this Option shall be in writing and shall be delivered by mail or hand
delivery as set forth below:
(i) if to Essex, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Secretary, or at such other address or addresses as may have
been furnished in writing by Essex to the Optionee; or
(ii) if to Optionee, at the address set forth in
below or at such other address or addresses as may have been furnished to Essex
in writing by the Optionee.
(c) This Option shall be governed by and construed in
accordance with the laws of the State of Maryland.
ESSEX CORPORATION
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
5
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof.
OPTIONEE
-----------------------------------
"Name"
Address:
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
6
SCHEDULE A
Schedule A - "Name"
A B C D=A/B*C E F=E/D
Option Determinaton "Number" Option Exercise Exercise
Factor Factor Shares Shares Factor Price
4.590665 $3.09 "Number" "Number" "Number" "$Amount"
4.590665 $4.00 "Number" "Number" "Number" "$Amount"
4.590665 $5.00 "Number" "Number" "Number" "$Amount"
4.590665 $6.00 "Number" "Number" "Number" "$Amount"
4.590665 $7.00 "Number" "Number" "Number" "$Amount"
1
EXHIBIT A
NON-QUALIFIED STOCK OPTION AGREEMENT
Exercise Notice
At this time, I wish to purchase _____ shares of the Common Stock of
Essex Corporation through the exercise of the Option granted to me pursuant to
the Non-Qualified Stock Option Agreement dated February 28, 2003.
Please issue the Common Stock in the following manner and mail the
certificate(s) to the following address:
-----------------------------------
Name
-----------------------------------
Street
-----------------------------------
City
-----------------------------------
State Zip Code
Very truly yours,
-----------------------------------
Signature
-----------------------------------
Optionee's Name
1