Exhibit 10.8
DYNCORP 1995 STOCK OPTION PLAN
(Effective July 1, 1995, as revised January 30 and May 15, 1997
and March 5, 1998)
1. PURPOSE OF PLAN
(a) The Board of Directors of DynCorp hereby adopts the DynCorp 1995
Stock Option Plan as of the effective date specified above to provide a means to
encourage exceptional performance by key members of the company's management
team, and to provide a mechanism for use in furtherance of the DynCorp Equity
Target Ownership Plan ("ETOP") which has been adopted concurrently with this
Plan.
(b) Equity ownership of DynCorp common stock ("Stock" or "Shares") by
key members of management is considered by the Board to be an important element
in securing superior performance by management on behalf of all of the
stockholders. While management compensation is important, equity participation
and equity ownership provide additional valuable incentives to achieve
outstanding management performance which translates into enhanced share value.
(c) Under the Plan, the Compensation Committee of the Board of
Directors (the "Committee" ) is authorized to approve periodic grants of options
to acquire Stock to key members of the management organizations of the company
and its various wholly owned subsidiaries, divisions and strategic business
units (the "Company"). All grants under this Plan shall be made in strict
accordance with the terms of the Plan.
2. NAME AND TERM OF THE PLAN
The name of the Plan shall be the "DynCorp 1995 Stock Option Plan"
which shall be referred to herein as the "Plan". The term of the Plan shall
commence as of the effective date and continue through a date which is ten (10)
years from the date of the last grant of options under the Plan; provided that
all options must be granted under the Plan by June 30, 2000.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee which shall have the
sole authority in its complete discretion to interpret the Plan and carry out
its intent and purpose. The Committee shall also have the right from time to
time to amend the Plan. See miscellaneous provisions below.
4. ELIGIBILITY - PARTICIPATION UNDER THE PLAN
(a) All full-time employees of the Company who are participants under
any Company-sponsored bonus or incentive compensation plan, all members of the
Board of Directors, and other employees as approved by the Committee shall be
eligible to become participants under the Plan; provided, however, that the
granting of options under the Plan shall be within the sole discretion of the
Committee. In approving the granting of options under this Plan, the Committee
shall act on recommendations of the DynCorp Chief Executive Officer who shall in
turn act on recommendations of the Company's Sector Presidents. Specific
recommendations by the Sector Presidents shall be reviewed by the CEO who shall
forward such recommendations as he deems appropriate together with
recommendations for awards to non-operating participants to the Committee for
approval.
(b) In the granting of options under the Plan, consideration may be
given to the following nonexclusive factors:
The obligations of the proposed optionee under the ETOP;
The ability of the proposed optionee to have a significant
positive impact on the Company's business success and improved
Stock value;
The potential for the proposed optionee to accept increased
responsibility within the Company;
The need to offer a competitive compensation and benefit package
in order to attract and retain qualified and highly motivated key
personnel; and
Performance and results
5. SHARES AUTHORIZED FOR ISSUANCE
A total of 1,250,000 shares of DynCorp Common Stock, par value $0.10
per share, shall be authorized for issuance under the Plan. When issued upon the
valid exercise of options granted under the Plan, such Shares shall be fully
paid, non-assessable shares of DynCorp's common stock. Options shall not be
granted for more than the total number of Shares authorized for issuance
hereunder from time to time; provided, that Shares represented by forfeited
options will be considered authorized again for issuance hereunder.
6. MAKING OF GRANTS - PRICE
(a) Grants of options under the Plan shall be made only in writing and
shall only be valid if signed by the President or any Senior Vice President of
DynCorp. Recipients of grants shall be entitled to receive same only upon the
execution of an Optionee's Agreement in the form appended as Attachment A to
this Plan, under which the optionee will agree to hold and exercise options
hereunder in accordance with the Plan. Among other things, the Agreement will
provide that upon termination of employment for certain reasons, all unexercised
options will be forfeited.
(b) Grants will be made in the following way, and in accordance with
the following guidelines:
Grants will be made only in increments of 100 Shares;
All grants will be subject to the vesting requirements of the
Plan described below;
The exercise price contained in all options issued under the Plan
shall be no less than the most recently determined fair market value
of the Stock as of the date of grant as determined in connection
with trading on the DynCorp Internal Stock Market (the "Market
Price");
Grants will be non-transferable except as specifically provided
and permitted under the Plan, and shall be exercisable only during
the specified term of the Plan;
Grants may be made without conditions (other than the execution of
the Optionee's Agreement) or with conditions approved by the
Committee -- such as a condition that the proposed optionee
acquire additional Shares in the DynCorp Internal Stock Market
("Internal Market"); and
Grants of options under the Plan may also be made conditional
upon a proposed optionee becoming an employee of the Company.
7. VESTING OF OPTIONS
(a) (1) For options issued prior to March 5, 1998: Options
issued under the Plan may be exercised only when the right to exercise
vests under the Plan terms, and only then to the extent of the vesting
percentage. The right to exercise options granted under the Plan prior
to March 5, 1998 shall vest over a period of five (5) years following
the grant of the option at the annual rate of 20% of the options
granted. For example, if an optionee receives the grant of an option to
purchase 1,000 Shares on June 30, 1995, he or she could exercise the
option to the extent of 200 Shares after June 30, 1996, and to the
extent of an additional 200 Shares after each successive June 30th
through June 30, 2000.
(2) For options issued on or after March 5, 1998:
Options issued under the Plan may be exercised only when the right to
exercise vests under the Plan terms, and only then to the extent of the
vesting percentage. The right to exercise options granted under the
Plan on or after March 5, 1998 shall vest over a period of four (4)
years following the grant of the option at the annual rate of 25% of
the options granted. For example, if an optionee receives the grant of
an option to purchase 1,000 Shares on June 30, 1998, he or she could
exercise the option to the extent of 250 Shares after June 30, 1999,
and to the extent of an additional 250 Shares after each successive
June 30th through June 30, 2002.
(b) (1) For options issued prior to March 5, 1998: Options
granted prior to March 5, 1998 which are not exercised within seven (7)
years from the date of grant shall expire, and the optionee shall have
no further rights with respect to such options under the Plan or
otherwise.
(2) For options issued on or after March 5, 1998:
Options granted on or after March 5, 1998 which are not exercised
within ten (10) years from the date of grant shall expire, and the
optionee shall have no further rights with respect to such options
under the Plan or otherwise.
(c) The Committee shall have the authority under this Plan to grant
options hereunder that are subject to special performance vesting provisions.
For example, notwithstanding the fact that options hereunder are vested,
exercise may be conditioned upon any of the following additional performance
criteria:
The achievement of a specified stock price; or
The achievement of a specified percentage stock price increase
over the option price--e.g., vested options can only be exercised
in the event the price as of the exercise date is at least 25%
higher than the grant price.
Moreover, the Committee shall have the authority to grant special
vesting period reductions, contingent on the Company's achievement of a
specified stock price or percentage of increase over the grant price. For
example, options might be granted with the understanding that in the event the
stock price rose to some specified price per share for at least two quarters,
all of some portion of unvested options should immediately vest.
8. MECHANICS FOR EXERCISING OPTIONS
An optionee may exercise a vested option by sending a completed and
signed Optionee Exercise Form (as prescribed by DynCorp) to the DynCorp
Corporate Secretary together with his or her personal check in the amount of the
exercise price times the number of vested-option Shares that are being
purchased. Subject to the restrictions of any current financial covenants, the
optionee may pay the exercise price, in whole or in part, by surrendering
previously owned Shares, which shall be applied at the Market Price toward
payment of the exercise price. The Corporate Secretary will either cause the
Company to issue Shares in the name of the optionee for each option exercised or
will cause such Shares to be purchased in the Internal Market and recorded on
the Optionee's Stock account within 10 days following the next scheduled
Internal Market trade day. Under the terms of the Optionee Agreement, the
optionee will specify whether the Company shall withhold taxes as required upon
the exercise of the option from the Optionee's compensation, whether the
optionee shall pay such required amount in cash, or whether such withholding
shall be satisfied in Shares (at the Market Price). See discussion below
concerning taxation."
9. FORFEITURE OF CERTAIN UNEXERCISED OPTIONS - SHORTENING OF OPTION PERIOD
The right to exercise vested options, and all interests in unvested
options, shall terminate and be forfeited in the event an Optionee's employment
is terminated for any reason except retirement, death or disability; provided
that the Committee in its sole discretion may permit a terminated optionee a
period of no more than 30 days after termination of employment within which to
exercise previously vested options. In the event of the death of an optionee,
all unvested options shall immediately become vested, and his or her estate or
legal representative shall be entitled to exercise any unexercised options;
provided, that such exercise must be made prior to the earliest to occur of the
expiration date of such options, or the 180th day after the Optionee's death. An
optionee who is permanently and totally disabled as established by evidence
satisfactory to the Committee may exercise all options which are vested as of
his or her termination date; provided such exercise is made within the same
period described in the immediately preceding sentence. In the event of an
Optionee's retirement at age 65 or older, all options shall immediately become
vested, and the optionee shall have a period of 360 days from his or her
retirement date in which to exercise such options. All other optionees who
retire prior to achieving the age of 65 years shall be entitled for a period of
180 days after retirement to exercise those options which were vested as of his
or her retirement date. All Shares obtained pursuant to the exercise of options
under these circumstances following termination of employment due to death,
disability or retirement shall be subject to the Company's right of first
refusal to purchase such Shares at the prevailing Market Price, which right
shall be exercised by the Company in accordance with the procedures set forth in
the Optionee Agreement.
For purposes of clarification, if an optionee is serving as a member of the
Board of Directors as well as being an employee, such optionee shall not be
deemed to have been terminated from employment until the later of termination as
an employee and termination as a Director, and an optionee who is terminated by
reason of disability at age 65 or older shall be deemed to have retired as of
his termination date.
10. TAX INFORMATION
The Company will withhold from the Optionee's compensation, or require
as a condition of option exercise that the optionee pay to the Company, an
amount sufficient to comply with applicable federal and state withholding
statutes. DynCorp may, however, permit optionees to satisfy withholding
requirements, to the extent permitted by law, through the transfer to the
Company of Shares having a fair market value equal to the withholding
requirement.
11. MISCELLANEOUS PROVISIONS
(a) The granting of an option shall impose no obligation upon the
optionee to exercise such option.
(b) Options shall not be transferable other than by will or by the laws
of descent and distribution and during an Optionee's lifetime shall be
exercisable only by such Optionee.
(c) The aggregate number of Shares available for options under the
Plan, the Shares subject to any option, and the price per share shall all be
proportionately adjusted for any increase or decrease in the number of issued
Shares subsequent to the effective date of the Plan resulting from (1) a
subdivision or consolidation of Shares or any other capital adjustment, (2) the
payment of a Stock dividend. If DynCorp shall be the surviving corporation in
any merger or consolidation, any option shall pertain, apply, and relate to the
securities to which a holder of the number of Shares subject to the option would
have been entitled after the merger or consolidation. Upon dissolution or
liquidation of DynCorp, or upon a merger or consolidation in which DynCorp is
not the surviving corporation, this Plan or an identical successor plan shall
continue in force, or, should such successor plan not be adopted or this Plan
continued, all options outstanding under the Plan shall immediately vest and
each optionee (and each other person entitled under the Plan to exercise an
option) shall have the right, immediately prior to such dissolution or
liquidation, or such merger or consolidation, to exercise such Optionee's
options in whole or in part. Upon the consummation of any such dissolution,
liquidation, merger, or consolidation, all unexercised options shall terminate.
(d) The Board or Committee, by resolution, may terminate, amend, or
revise the Plan with respect to any Shares as to which options have not been
granted. Neither the Board nor the Committee may, without the consent of the
holder of an option, alter or impair any option previously granted under the
Plan, except as authorized herein. Unless sooner terminated, the Plan shall
remain in effect for a period of five (5) years from the date of the Plan's
adoption by the Board. Termination of the Plan shall not affect any option
previously granted.
(e) As a condition to the exercise of any portion of an option, DynCorp
may require the person exercising such option to represent and warrant at the
time of such exercise that any Shares acquired at exercise are being acquired
only for investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for DynCorp, such a representation is
required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
(f) DynCorp, during the term of this Plan, will at all times reserve
and keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of Shares that shall be sufficient to satisfy the requirements of this Plan. The
inability of DynCorp to obtain from any regulatory body having jurisdiction the
authority deemed necessary by counsel for DynCorp for the lawful issuance and
sale of its Stock hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell Stock as to which the requisite
authority has not been obtained.
(g) This Plan shall be governed by the laws of the Commonwealth of
Virginia, without regard to the conflicts-of-law provisions thereof.
(h) Nothing herein shall be implied to constitute a contract of
employment for any person.
(i) The plan shall become effective as of the effective date upon
approval by the DynCorp Board of Directors.