GOVERNMENT TECHNOLOGY SERVICES, INC.
1996 STOCK OPTION PLAN
1. Establishment and Purposes of the Plan.
Government Technology Services, Inc. hereby establishes this 1996 Stock
Option Plan to promote the interests of the Company and its stockholders by
(i) helping to attract and retain the services of non-employee directors and
selected key employees of the Company who are in a position to make a
material contribution to the successful operation of the Company's business,
(ii) motivating such persons, by means of performance-related incentives, to
achieve the Company's business goals and (iii) enabling such persons to
participate in the long-term growth and financial success of the Company by
providing them with an opportunity to purchase stock of the Company.
2. Definitions.
The following definitions shall apply throughout the Plan:
a. "Affiliate" shall mean any entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Company.
b. "Board of Directors" shall mean the Board of Directors of the
Company.
c. "Code" shall mean the Internal Revenue Code of 1986, as amended.
References in the Plan to any section of the Code shall be deemed to include
any amendment or successor provisions to such section and any regulations
issued under such section.
d. "Common Stock" shall mean the common stock, par value $0.005 per
share, of the Company.
e. "Company" shall mean Government Technology Services, Inc., a
Delaware corporation and any "subsidiary" corporation, whether now or
hereafter existing, as defined in Sections 424(f) and (g) of the Code.
f. "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan or, if no Committee
shall be appointed or in office, the Board of Directors.
g. "Continuous Employment" shall mean the absence of any interruption
or termination of employment by the Company. Continuous Employment shall not
be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Committee or in the case of transfers
between locations of the Company.
h. "Disinterested Person" shall mean an administrator of the Plan who
satisfies the requirements, if any, imposed on administrators of plans in
order for the grant of Options to be exempt under any version of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, that is relied on by
the Company..
i. "Employee" shall mean any employee of the Company, including
officers and directors who are also employees.
j. "Fair Market Value" shall mean, with respect to Shares, the fair
market value per Share on the date an option is granted and, so long as the
Shares are quoted on the National Association of Securities Dealers Automated
Quotations ("Nasdaq") System), the Fair Market Value per Share shall be the
closing price on the Nasdaq Stock Market as of the date of grant of the
Option, as reported in The Wall Street Journal or, if there are no sales on
such date, on the immediately preceding day on which there were reported
sales.
k. "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
l. "Non-Employee Director" shall mean any director of the Company who
is not an Employee of the Company.
m. "Non-Statutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
n. "Option" shall mean a stock option to purchase Common Stock granted
to an Optionee pursuant to the Plan.
o. "Option Agreement" means a written agreement substantially in one
of the forms attached hereto as Exhibit A, or such other form or forms as the
Committee (subject to the terms and conditions of the Plan) may from time to
time approve, evidencing and reflecting the terms of an Option.
p. "Optioned Stock" shall mean the Common Stock subject to an Option
granted pursuant to the Plan.
q. "Optionee" shall mean any Employee or Non-Employee Director who is
granted an Option.
r. "Plan" shall mean this Government Technology Services, Inc. 1996
Stock Option Plan.
s. "Shares" shall mean shares of the Common Stock or any shares into
which such Shares may be converted in accordance with Section 11 of the Plan.
3. Shares Reserved.
The maximum aggregate number of Shares reserved for issuance pursuant to
the Plan shall be 600,000 Shares or the number of shares of stock to which
such Shares shall be adjusted as provided in Section 11 of the Plan. Such
number of Shares may be set aside out of authorized but unissued Shares not
reserved for any other purpose, or out of issued Shares acquired for and held
in the treasury of the Company from time to time.
Shares subject to, but not sold or issued under, any Option terminating,
expiring or canceled for any reason prior to its exercise in full, shall
again become available for Options thereafter granted under the Plan, and the
same shall not be deemed an increase in the number of Shares reserved for
issuance under the Plan.
4. Administration of the Plan.
a. The Plan shall be administered by a Committee designated by the
Board of Directors to administer the Plan and comprised of not less than two
directors, each of whom is a Disinterested Person. In addition, each
director designated by the Board of Directors to administer the Plan shall be
an "outside director" as defined in the Treasury regulations issued pursuant
to Section 162(m) of the Code. Members of the Committee shall serve for such
period of time as the Board of Directors may determine or until their
resignation, retirement, removal or death, if sooner. From time to time the
Board of Directors may increase the size of the Committee and appoint
additional members thereto, remove members (with or without cause) and
appoint new members in substitution therefor or fill vacancies however
caused.
b. Subject to the provisions of the Plan, the Committee shall have the
authority, in its discretion: (i) to grant Incentive Stock Options, in
accordance with Section 422 of the Code, or Non-Statutory Stock Options; (ii)
to determine, upon review of relevant information, the Fair Market Value per
Share; (iii) to determine the exercise price of the Options to be granted to
Employees in accordance with Section 7(c) of the Plan; (iv) to determine the
Employees to whom, and the time or times at which, Options shall be granted,
and the number of Shares subject to each Option; (v) to prescribe, amend and
rescind rules and regulations relating to the Plan subject to the limitations
set forth in Section 13 of the Plan; (vi) to determine the terms and
provisions of each Option granted to Optionees under the Plan and each Option
Agreement (which need not be identical with the terms of other Options and
Option Agreements) and, with the consent of the Optionee, to modify or amend
an outstanding Option or Option Agreement; (vii) to accelerate the exercise
date of any Option; (viii) to determine whether any Optionee will be required
to execute a stock repurchase agreement or other agreement as a condition to
the exercise of an Option, and to determine the terms and provisions of any
such agreement (which need not be identical with the terms of any other such
agreement) and, with the consent of the Optionee, to amend any such
agreement; (ix) to interpret the Plan or any agreement entered into with
respect to the grant or exercise of Options; (x) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted or to take such other actions as may be
necessary or appropriate with respect to the Company's rights pursuant to
Options or agreements relating to the grant or exercise thereof; and (xi) to
make such other determinations and establish such other procedures as it
deems necessary or advisable for the administration of the Plan.
Notwithstanding anything else herein, the Committee shall not have the
authority to adjust or amend the exercise price of any Options previously
awarded to any Optionee, whether through amendment, cancellation, replacement
grant or other means.
c. All decisions, determinations and interpretations of the Committee
shall be final and binding on all Optionees and any other holders of any
Options granted under the Plan.
d. The Committee shall keep minutes of its meetings and of the actions
taken by it without a meeting. A majority of the Committee shall constitute
a quorum, and the actions of a majority at a meeting, including a telephone
meeting, at which a quorum is present, or acts approved in writing by a
majority of the members of the Committee without a meeting, shall constitute
acts of the Committee.
e. The Company shall pay all original issue and transfer taxes with
respect to the grant of Options and/or the issue and transfer of Shares
pursuant to the exercise thereof, and all other fees and expenses necessarily
incurred by the Company in connection therewith; provided, however, that the
person exercising an Option shall be responsible for all payroll,
withholding, income and other taxes incurred by such person in respect of the
exercise of an Option or transfer of Shares.
5. Eligibility.
Non-Statutory Stock Options may be granted under the Plan to Employees
and Non-Employee Directors; Incentive Stock Options may be granted under the
Plan only to Employees. An Employee or Non-Employee Director who has been
granted an Option may, if he or she is otherwise eligible, be granted
additional Options.
6. Non-Employee Directors.
Notwithstanding the powers set forth in Section 4(b) of the Plan, the
Committee shall have no power to determine eligibility for grants of Non-
Statutory Stock Options or the number of Shares for which Non-Statutory Stock
Options may be granted or the timing or exercise price of Non-Statutory Stock
Options granted to any Non-Employee Director.
All Non-Employee Directors of the Company are granted automatically a
Non-Statutory Stock Option to purchase up to 15,000 Shares, and a Non-
Employee Director elected to serve as Chairman of the Board is granted
automatically a Non-Statutory Stock Option to purchase up to an additional
15,000 Shares, of the Company's Common Stock: (1) as of the date such person
is initially elected to serve as a Non-Employee Director and/or as Chairman,
respectively, and (2) as of the date such person is re-elected as a Non-
Employee Director each year at an annual stockholders' meeting or is re-
elected to serve as Chairman of the Board. Any such Shares shall vest and
become exercisable, cumulatively, in 12 equal monthly installments commencing
on the last business day of the month of grant; provided that if an Optionee
ceases to serve as a Non-Employee Director during any month, the Option shall
cease to vest and become exercisable with respect to any subsequent month(s).
In the event that the initial election of a Non-Employee Director or
Chairman occurs prior to an annual stockholders' meeting, the Non-Employee
Director shall receive a pro rata option grant (or, in the case of Chairman,
an additional pro rata option grant) in connection with his or her election,
and the related Shares shall vest and become exercisable, cumulatively, in
equal monthly installments.
If an Optionee ceases to serve as a Non-Employee Director for any
reason, he or she may, but only within six months following the date he or
she ceases to serve on the Board of Directors, exercise his or her Option to
the extent that he or she was entitled to exercise it at the date of such
termination. To the extent that he or she does not exercise such Option
(which he or she was entitled to exercise) within the time specified herein,
the Option shall terminate.
The consideration to be paid for the Shares to be issued upon exercise
of an Option by a Non-Employee Director shall consist entirely of cash, check
or broker's commitment to pay, or some combination thereof.
7. Terms and Conditions of Options.
Options granted pursuant to the Plan by the Committee shall be either
Incentive Stock Options or Non-Statutory Stock Options and shall be evidenced
by an Option Agreement providing, in addition to such other terms as the
Committee may deem advisable, the following terms and conditions:
a. Time of Granting Options. The date of grant of an Option shall,
except in the case of Non-Employee Directors, be the date on which the
Committee makes the determination granting such Option. Notice of the
determination shall be given to each Optionee within a reasonable time after
the date of such grant.
b. Number of Shares. Each Option Agreement shall state the number of
Shares to which it pertains and whether such Option is intended to constitute
an Incentive Stock Option or a Non-Statutory Stock Option. The maximum
number of Shares which may be subject to Options granted under the Plan
during any calendar year to any Optionee is 100,000 Shares. If an Option
held by an Employee of the Company is canceled, the canceled Option shall
continue to be counted against the maximum number of Shares for which Options
may be granted to such Employee and any replacement Option granted to such
Employee shall also count against such limit.
c. Exercise Price. The exercise price per Share for the Shares to be
issued pursuant to the exercise of an Option shall be such price as is
determined by the Committee; provided, however, that with respect to both
Non-Statutory Stock Options and Incentive Stock Options such price shall in
no event be less than 100% of the Fair Market Value per Share on the date of
grant, except that the Committee may specifically provide that the exercise
price of an Option may be higher or lower in the case of an Option granted to
employees of a company acquired by the Company in assumption and substitution
of options held by such employees at the time such company is acquired.
In the case of an Incentive Stock Option granted to an Employee
who, at the time the Incentive Stock Option is granted, owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of
the Code) stock possessing more than 10% of the combined voting power of all
classes of stock of the Company, the exercise price per Share shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
d. Medium and Time of Payment. Except in the case of Non-Employee
Directors, the consideration to be paid for the Shares to be issued upon
exercise of an Option and to be paid to satisfy any withholding tax
obligation incident thereto, including the method of payment, shall be
determined by the Committee and, subject to approval by the Committee, may
consist entirely or in any combination of cash, check, a commitment to pay by
a broker or Shares held by the Optionee or issuable upon exercise of the
Option, or such other consideration and method of payment permitted under any
laws to which the Company is subject. In the case of an Incentive Stock
Option, such provision shall be determined on the date of the grant.
e. Term of Options. The term of an Incentive Stock Option may be up
to 10 years from the date of grant thereof; provided, however, that the term
of an Incentive Stock Option granted to an Employee who, at the time the
Incentive Stock Option is granted, owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company, shall be five years from the date of grant thereof or such shorter
term as may be provided in the Option.
The term of a Non-Statutory Stock Option, in the case of an
Employee, may be up to 10 years from the date such Employee first becomes
vested in any portion of an Option award; and in the case of Non-Employee
Director, shall be 10 years from the date of grant thereof.
The term of any Option, other than an Option awarded to a Non-
Employee Director, may be less than the maximum term provided for herein as
specified by the Committee upon grant of the Option and as set forth therein.
f. Maximum Amount of Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time an Incentive Stock Option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under
all incentive stock option plans of the Company exceeds $100,000, the Options
in excess of such limit shall be treated as Non-Statutory Stock Options.
8. Exercise of Option.
a. In General. Any Option granted hereunder to an Employee shall be
exercisable at such times and under such conditions as may be determined by
the Committee and as shall be permissible under the terms of the Plan,
including any performance criteria with respect to the Company and/or the
Optionee as may be determined by the Committee. Any Option granted hereunder
to a Non-Employee Director shall be exercisable at such times and under such
conditions as set forth in Section 6 of the Plan.
An Option may be exercised in accordance with the provisions of the
Plan as to all or any portion of the Shares then exercisable under an Option
from time to time during the term of the Option. However, an Option may not
be exercised for a fraction of a Share.
b. Procedure. An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company at its principal
business office in accordance with the terms of the Option Agreement by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company,
accompanied by any other agreements required by the terms of the Plan and/or
Option Agreement or as required by the Committee and payment by the Optionee
of all payroll, withholding or income taxes incurred in connection with such
Option exercise (or arrangements for the collection or payment of such tax
satisfactory to the Committee are made). Full payment may consist of such
consideration and method of payment allowable under Section 7(d) of the Plan.
c. Decrease in Available Shares. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
d. Exercise of Stockholder Rights. Until the Option is properly
exercised in accordance with the terms of this section, no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the Option is
exercised, except as provided in Section 11 of the Plan.
e. Termination of Eligibility. If an Optionee ceases to serve as an
Employee for any reason other than death or permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) and thereby terminates
his or her Continuous Status as an Employee he or she may, but only within
one month, or such other period of time not exceeding three months in the
case of an Incentive Stock Option (or in the case of an Optionee subject to
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, the greater of
six months from the date of the Option award or three months from the date of
termination of employment) or six months in the case of a Non-Statutory Stock
Option, in each case as is determined by the Committee, following the date he
or she ceases his or her Continuous Status as an Employee (subject to any
earlier termination of the Option as provided by its terms), exercise his or
her Option to the extent that he or she was entitled to exercise it at the
date of such termination. To the extent that he or she was not entitled to
exercise the Option at the date of such termination, or if he or she does not
exercise such Option (which he or she was entitled to exercise) within the
time specified herein, the Option shall terminate. Notwithstanding anything
to the contrary herein, the Committee may at any time and from time to time
prior to the termination of a Non-Statutory Stock Option, with the consent of
the Optionee, extend the period of time during which the Optionee may
exercise his or her Non-Statutory Stock Option following the date he or she
ceases his or her Continuous Status as an Employee; provided, however, that
the maximum period of time during which a Non-Statutory Stock Option shall be
exercisable following the date on which an Optionee terminates his or her
Continuous Status as an Employee shall not exceed an aggregate of six months,
that the Non-Statutory Stock Option shall not be, or as a result of such
extension become, exercisable after the expiration of the term of such Option
as set forth in the Option Agreement and, notwithstanding any extension of
time during which the Non-Statutory Stock Option may be exercised, that such
Option, unless otherwise amended by the Committee, shall only be exercisable
to the extent the Optionee was entitled to exercise it on the date he or she
ceased his or her Continuous Status as an Employee.
f. Death or Disability Of Optionee. If an Optionee's Continuous
Status as an Employee ceases due to death or permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) of the Optionee, the
Option may be exercised within six months (or such other period of time not
exceeding one year as is determined by the Committee) following the date of
death or termination of employment due to permanent or total disability
(subject to any earlier termination of the Option as provided by its terms),
by the Optionee in the case of permanent or total disability, or in the case
of death by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but in any case (unless
otherwise determined by the Committee) only to the extent the Optionee was
entitled to exercise the Option at the date of his or her termination of
employment by death or permanent and total disability. To the extent that he
or she was not entitled to exercise such Option at the date of his or her
termination of employment by death or permanent and total disability, or if
he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.
g. Expiration of Option. Notwithstanding any provision in the Plan,
including but not limited to the provisions set forth in Sections 8(e) and
8(f), an Option may not be exercised, under any circumstances, after the
expiration of its term.
h. Conditions on Exercise and Issuance. As soon as practicable after
any proper exercise of an Option in accordance with the provisions of the
Plan, the Company shall deliver to the Optionee at the principal executive
office of the Company or such other place as shall be mutually agreed upon
between the Company and the Optionee, a certificate or certificates
representing the Shares for which the Option shall have been exercised. The
time of issuance and delivery of the certificate or certificates representing
the Shares for which the Option shall have been exercised may be postponed by
the Company for such period as may be required by the Company, with
reasonable diligence, to comply with any law or regulation applicable to the
issuance or delivery of such Shares.
Options granted under the Plan are conditioned upon the Company
obtaining any required permit or order from appropriate governmental
agencies, authorizing the Company to issue such Options and Shares issuable
upon exercise thereof. Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, applicable state law, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and may be further
subject to the approval of counsel for the Company with respect to such
compliance.
i. Withholding or Deduction for Taxes. The grant of Options hereunder
and the issuance of Shares pursuant to the exercise thereof is conditioned
upon the Company's reservation of the right to withhold, in accordance with
any applicable law, from any compensation or other amounts payable to the
Optionee any taxes required to be withheld under Federal, state or local law
as a result of the grant or exercise of such Option or the sale of the Shares
issued upon exercise thereof. To the extent that compensation and other
amounts, if any, payable to the Optionee are insufficient to pay any taxes
required to be so withheld, the Company may, in its sole discretion, require
the Optionee, as a condition of the exercise of an Option, to pay in cash to
the Company an amount sufficient to cover such tax liability or otherwise to
make adequate provision for the delivery to the Company of cash necessary to
satisfy the Company's withholding obligations under Federal and state law.
9. Non-transferability of Options.
Options granted under the Plan may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner, either
voluntarily or involuntarily by operation of law, other than by will or by
the laws of descent or distribution or, if permitted of Options granted under
Rule 16b-3, transfers between spouses incident to a divorce.
10. Holding Period.
In the case of officers and directors of the Company, at least six
months must elapse from the date of grant of the Option to the date of
disposition of the underlying Shares.
11. Adjustment Upon Change in Corporate Structure.
a. Subject to any required action by the stockholders of the Company,
the number of Shares covered by each outstanding Option, and the number of
Shares which have been authorized for issuance under the Plan but as to which
no Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the exercise or purchase
price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split or combination or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Company (other than stock awards to Employees or directors); provided,
however, that the conversion of any convertible securities of the Company
shall not be deemed to have been effected without the receipt of
consideration. Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to the Plan or an Option.
b. In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of
the assets of the Company (other than in the ordinary course of business), or
the merger or consolidation of the Company with or into another corporation,
as a result of which the Company is not the surviving and controlling
corporation, the Board of Directors shall (i) make provision for the
assumption of all outstanding options by the successor corporation or (ii)
declare that any Option shall terminate as of a date fixed by the Board of
Directors which is at least 30 days after the notice thereof to the Optionee
and shall give each Optionee the right to exercise his or her Option as to
all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable provided such exercise does not
violate Section 8(e) of the Plan.
c. No fractional shares of Common Stock shall be issuable on account
of any action aforesaid, and the aggregate number of shares into which Shares
then covered by the Option, when changed as the result of such action, shall
be reduced to the largest number of whole shares resulting from such action,
unless the Board of Directors, in its sole discretion, shall determine to
issue scrip certificates in respect to any fractional shares, which scrip
certificates, in such event shall be in a form and have such terms and
conditions as the Board of Directors in its discretion shall prescribe.
12. Stockholder Approval.
Effectiveness of the Plan shall be subject to approval by the
stockholders of the Company within 12 months before or after the date the
Plan is adopted; provided, however, that Options may be granted pursuant to
the Plan subject to subsequent approval of the Plan by such stockholders.
Stockholder approval shall be obtained by the affirmative votes of the
holders of a majority of voting Shares present or represented and entitled to
vote at a meeting of stockholders duly held in accordance with the laws of
the state of Delaware.
13. Amendment and Termination of the Plan.
a. Amendment and Termination. Except as provided in Section 13(b) of
the Plan, the Committee may amend or terminate the Plan from time to time in
such respects as the Committee may deem advisable and shall make any
amendments which may be required so that Options intended to be Incentive
Stock Options shall at all times continue to be Incentive Stock Options for
the purpose of Section 422 of the Code; provided, however, that without
approval of the holders of a majority of the voting Shares present or
represented and entitled to vote at a valid meeting of stockholders, no such
revision or amendment shall be made that affects the ability of Options
thereafter granted under the Plan to satisfy Rule 16b-3.
b. Effect of Amendment or Termination. Except as otherwise provided
in Section 11 of the Plan, any amendment or termination of the Plan shall not
affect Options already granted and such Options shall remain in full force
and effect as if the Plan had not been amended or terminated, unless mutually
agreed otherwise between the Optionee and the Company, which agreement must
be in writing and signed by the Optionee and the Company. Notwithstanding
anything to the contrary herein, this 1996 Stock Option Plan shall not
adversely affect, unless mutually agreed in writing by the Company and an
Optionee, the terms and provisions of any Option granted prior to the date
the Plan was approved by stockholders as provided in Section 12 of the Plan.
14. Indemnification.
No member of the Committee or of the Board of Directors shall be liable
for any act or action taken, whether of commission or omission, except in
circumstances involving willful misconduct, or for any act or action taken,
whether of commission or omission, by any other member or by any officer,
agent, or Employee. In addition to such other rights of indemnification they
may have as members of the Board of Directors, or as members of the
Committee, the Committee shall be indemnified by the Company against
reasonable expenses, including attorneys' fees actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken, by commission or omission, in connection
with the Plan or any Option taken thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for willful misconduct in the
performance of his or her duties; provided that within 60 days after
institution of any such action, suit or proceeding, a Committee member shall
in writing offer the Company the opportunity, at its own expense, to handle
and defend the same.
15. General Provisions.
a. Other Plans. Nothing contained in the Plan shall prohibit the
Company from establishing additional incentive compensation arrangements.
b. No Enlargement of Rights. Neither the Plan, nor the granting of
Shares, nor any other action taken pursuant to the Plan shall constitute or
be evidence of any agreement or understanding, express or implied, that the
Company will retain an Employee or a Non-Employee Director for any period of
time, or at any particular rate of compensation. Nothing in the Plan shall
be deemed to limit or affect the right of the Company or any such
corporations to discharge any Employee thereof at any time for any reason or
no reason. Nothing in the Plan shall in any way limit or affect the right of
the Board of Directors or the stockholders of the Company to remove any Non-
Employee Director or otherwise terminate his or her service as a director of
the Company.
No Employee or Non-Employee Director shall have any right to or
interest in Options authorized hereunder prior to the grant thereof to such
eligible person, and upon such grant he or she shall have only such rights
and interests as are expressly provided herein and in the related Option
Agreement, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.
c. Notice. Any notice to be given to the Company pursuant to the
provisions of the Plan shall be addressed to the Company in care of its
Secretary (or such other person as the Company may designate from time to
time) at its principal office, and any notice to be given to an Optionee whom
an Option is granted hereunder shall be delivered personally or addressed to
him or her at the address given beneath his or her signature on his or her
Stock Option Agreement, or at such other address as such Optionee or his or
her transferee (upon the transfer of the Optioned Stock) may hereafter
designate in writing to the Company. Any such notice shall be deemed duly
given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and actually received by the Company. It
shall be the obligation of each Optionee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter
mailed as provided hereinabove, with written notice of his or her direct
mailing address.
d. Applicable Law. To the extent that Federal laws do not otherwise
control, the Plan shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflict of laws rules
thereof.
e. Incentive Stock Options. The Company shall not be liable to an
Optionee or other person if it is determined for any reason by the Internal
Revenue Service or any court having jurisdiction that any Incentive Stock
Options are not incentive stock options as defined in Section 422 of the
Code.
f. Information to Optionees. The Company shall provide without charge
to each Optionee copies of such annual and periodic reports as are provided
by the Company to its stockholders generally.
g. Availability of Plan. A copy of the Plan shall be delivered to the
Secretary of the Company and shall be shown by him or her to any eligible
person making reasonable inquiry concerning it.
h. Severability. In the event that any provision of the Plan is found
to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though
the invalid or unenforceable provision was not contained herein.
16. Effective Date and Term of Plan.
The Plan shall become effective upon stockholder approval as provided in
Section 12 of the Plan. The Plan shall continue in effect for a term often
years unless sooner terminated under Section 13 of the Plan.
CERTIFICATE OF CORPORATE SECRETARY
The undersigned Corporate Secretary of Government Technology Services,
Inc. (the "Company") hereby certifies that the foregoing is a true and
correct copy of the Company's 1996 Stock Option Plan, as adopted by the
Company's stockholders on May 7, 1996.
IN WITNESS WHEREOF, the undersigned has executed this document as of the
7th day of May, 1996.
/s/ Worth D. MacMurray
Worth D. MacMurray
Corporate Secretary