NON-QUALIFIED STOCK OPTION AGREEMENT
under the
EPLUS INC.
AMENDED AND RESTATED 1998 LONG-TERM INCENTIVE PLAN
Optionee: Phillip G. Norton
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Number Shares Subject to Option: 258,200
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Exercise Price per Share: $10.87
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Date of Grant: November 16, 2004
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1. Grant of Option. ePlus inc. (the "Company") hereby grants to the
Optionee named above (the "Optionee"), under the ePlus inc. Amended and Restated
1998 Long-Term Incentive Plan (the "Plan"), a Non-Qualified Stock Option to
purchase, on the terms and conditions set forth in this agreement (this "Option
Agreement"), the number of shares indicated above of the Company's $0.01 par
value common stock (the "Stock"), at the exercise price per share set forth
above (the "Option"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned such terms in the Plan.
2. Vesting of Option. Unless the exercisability of the Option is
accelerated in accordance with Article 14 of the Plan, the Option shall vest
(become exercisable) 20% on the first anniversary of the date of grant, 20% on
the second anniversary of the date of grant, and 20% on the third anniversary of
the date of grant, 20% on the fourth anniversary and 20% on the fifth
anniversary of the date of grant.
3. Period of Option and Limitations on Right to Exercise. The Option will,
to the extent not previously exercised, lapse under the earliest of the
following circumstances; provided, however, that the Committee may, prior to the
lapse of the Option under the circumstances described in paragraphs (b), (c) and
(d) below, provide in writing that the Option will extend until a later date:
(a) The Option shall lapse as of 5:00 p.m., Eastern Time, on the fifth
year and three month anniversary of the date of grant (the "Expiration
Date").
(b) The Option shall lapse three months after the Optionee's
termination of employment or service as a director or consultant for any
reason other than the Optionee's death or Disability; provided, however,
that if the Optionee's employment or service is terminated by the Company
for Cause, the Option shall lapse immediately.
(c) If the Optionee's employment or service as a director or
consultant terminates by reason of Disability, the Option shall lapse one
year after the date of the Optionee's termination of employment or service.
(d) If the Optionee dies while employed or otherwise in service as a
director or consultant, or during the three-month period described in
subsection (b) above or during the one-year period described in subsection
(c) above and before the Option otherwise lapses, the Option shall lapse
one year after the date of the Optionee's death. Upon the Optionee's death,
the Option may be exercised by the Optionee's beneficiary.
If the Optionee or his beneficiary exercises an Option after termination of
employment or service, the Option may be exercised only with respect to the
shares that were otherwise vested on the Optionee's termination of employment or
service (including vesting by acceleration in accordance with Article 14 of the
Plan).
4. Exercise of Option. The Option shall be exercised by written notice
directed to the Secretary of the Company at the principal executive offices of
the Company, in substantially the form attached hereto as Exhibit A, or such
other form as the Committee may approve. If the person exercising the Option is
not the Optionee, such person shall also deliver with the notice of exercise
appropriate proof of his or her right to exercise the Option. Unless the
exercise is a broker-assisted "cashless exercise" as described below, such
written notice shall be accompanied by full payment in cash, shares of Stock
previously acquired by the Optionee (which shares may be delivered by
attestation or actual delivery of one or more certificates), or any combination
thereof, for the number of shares specified in such written notice; provided,
however, that if shares of Stock are used to pay the exercise price, such shares
must have been held by the Optionee for at least six months. The Fair Market
Value of the surrendered Stock as of the last trading day immediately prior to
the exercise date shall be used in valuing Stock used in payment of the exercise
price. To the extent permitted under Regulation T of the Federal Reserve Board,
and subject to applicable securities laws, the Option may be exercised through a
broker in a so-called "cashless exercise" whereby the broker sells the Option
shares and delivers cash sales proceeds to the Company in payment of the
exercise price. In such case, the date of exercise shall be deemed to be the
date on which notice of exercise is received by the Company and the exercise
price shall be delivered to the Company on the settlement date.
Subject to the terms of this Option Agreement, the Option may be exercised
at any time and without regard to any other option held by the Optionee to
purchase stock of the Company. No fractional shares of Stock shall be issued
upon exercise of the Option.
5. Beneficiary Designation. The Optionee, by written notice to the
Commmittee, may designate one or more persons (and from time to time change such
designation) including the Optionee's legal representative, who, by reason of
the Optionee's death, shall acquire the right to exercise all or a portion of
the Option. If no beneficiary has been designated or survives the Optionee, the
Option may be exercised by the personal representative of the Optionee's estate.
If the person with exercise rights desires to exercise any portion of the
Option, such person must do so in accordance with the terms and conditions of
this Agreement and the Plan.
6. Withholding. The Company has the authority and the right to deduct or
withhold, or require the Optionee to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes (including the Optionee's FICA
obligation) required by law to be withheld with respect to any taxable event
arising as a result of the exercise of the Option. Such withholding requirement
may be satisfied, in whole or in part, at the election of the Company, by
withholding from the Option shares of Stock having a Fair Market Value on the
date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
7. Limitation of Rights. The Option does not confer to the Optionee or the
Optionee's personal representative any rights of a shareholder of the Company
unless and until shares of Stock are in fact issued to such person in connection
with the exercise of the Option. Nothing in this Option Agreement shall
interfere with or limit in any way the right of the Company or any Parent or
Subsidiary to terminate the Optionee's service at any time, nor confer upon the
Optionee any right to continue in the service of the Company or any Parent or
Subsidiary.
8. Stock Reserve. The Company shall at all times during the term of this
Option Agreement reserve and keep available such number of shares of Stock as
will be sufficient to satisfy the requirements of this Option Agreement.
9. Optionee's Covenant. The Optionee hereby agrees to use his best efforts
to provide services to the Company in a workmanlike manner and to promote the
Company's interests.
10. Restrictions on Transfer and Pledge. The Option may not be pledged,
encumbered, or hypothecated to or in favor of any party other than the
Company or a Parent or Subsidiary, or be subject to any lien, obligation,
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or liability of the Optionee to any other party other than the Company or
a Parent or Subsidiary. The Option is not assignable or transferable by the
Optionee other than by will or the laws of descent and distribution; provided,
however, that the Committee may (but need not) permit other transfers where the
Committee concludes that such transferability (i) does not result in accelerated
taxation and (ii) is otherwise appropriate and desirable, taking into account
any factors deemed relevant, including without limitation, state or federal tax
or securities laws applicable to transferable options. The Option may be
exercised during the lifetime of the Optionee only by the Optionee or any
permitted transferee.
11. Restrictions on Issuance of Shares. If at any time the Board shall
determine in its discretion, that listing, registration or qualification of the
shares of Stock covered by the Option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition to the exercise of the Option,
the Option may not be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
12. Plan Controls. The terms contained in the Plan are incorporated into
and made a part of this Option Agreement and this Option Agreement shall be
governed by and construed in accordance with the Plan. In the event of any
actual or alleged conflict between the provisions of the Plan and the provisions
of this Option Agreement, the provisions of the Plan shall be controlling and
determinative.
13. Successors. This Option Agreement shall be binding upon any successor
of the Company, in accordance with the terms of this Option Agreement and the
Plan.
14. Severability. If any one or more of the provisions contained in this
Option Agreement are invalid, illegal or unenforceable, the other provisions of
this Option Agreement will be construed and enforced as if the invalid, illegal
or unenforceable provision had never been included.
15. Notice. Notices and communications under this Option Agreement must be
in writing and either personally delivered or sent by registered or certified
United States mail, return receipt requested, postage prepaid. Notices to the
Company must be addressed to:
ePlus inc.
13595 Dulles Technology Drive
Herndon, VA 20171
Attn: Secretary
or any other address designated by the Company in a written notice to the
Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Company, or at any other address given
by the Optionee in a written notice to the Company.
IN WITNESS WHEREOF, ePlus inc., acting by and through its duly authorized
officers, has caused this Option Agreement to be executed, and the Optionee has
executed this Option Agreement, all as of the day and year first above written.
ePlus inc.
By:/S/ Steven J. Mencarini
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Name: Steven J. Mencarini
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Title: Senior Vice President
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Date:February 10, 2005
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OPTIONEE: /S/ Phillip G. Norton
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Date:February 10, 2005
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EXHIBIT A
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NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK OF
EPLUS INC.
Name: ________________________
Address:________________________
________________________
Date: ________________________
ePlus inc.
13595 Dulles Technology Drive
Herndon, VA 20171
Attention: Secretary
Re: Exercise of Non-Qualified Stock Option
under the ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan
I elect to purchase ______________ shares of the Common Stock of ePlus inc.
("ePlus") pursuant to my Stock Option Agreement dated ______________. The
exercise price of the Option is $_______ per share.
The purchase will take place on the Exercise Date, which will be (i) as
soon as practicable following the date of this notice and all other necessary
forms and payments are received by ePlus, unless I specify a later date (not to
exceed 30 days following the date of this notice), or (ii) in the case of a
broker-assisted cashless exercise (as indicated below), the date of this notice.
I acknowledge that I am not entitled to receive any shares of ePlus Stock
until I have (i) paid the exercise price in full and (ii) satisfied my tax
withholding obligations, in one of the methods permitted below.
1. Payment of Exercise price. On or before the Exercise Date (or, in the
case of a broker-assisted cashless exercise, on the settlement date following
the Exercise Date), I will pay the full exercise price in the form specified
below (check one):
[ ] Cash Only: by delivering a check to ePlus for $___________, which
is the full amount of the exercise price.
[ ] Cash and Shares: by delivering a check to ePlus for $_________ for
part of the exercise price. I will pay the balance of the exercise
price by delivering to ePlus shares of ePlus Stock that I have
owned for at least six months, which shares have a Fair Market
Value as of the Exercise Date equal to the balance of the exercise
price of the Option. (Such delivery may be made by attestation
of my ownership or by actual delivery of one or more stock
certificates duly endorsed for transfer.) If the number of shares
of such ePlus Stock so delivered exceeds the number needed to pay
the exercise price, ePlus will issue me a new stock certificate for
the excess.
[ ] Shares Only: by delivering to ePlus shares of ePlus Stock that
I have owned for at l east six months, which shares have a Fair
Market Value as of the Exercise Date equal to the full exercise
price of the Option. (Such delivery may be made by attestation
of my ownership or by actual delivery of one or more stock
certificates duly endorsed for transfer.) If the number of
shares of such ePlus Stock so delivered exceeds the number
needed to pay the exercise price, ePlus will issue me a new stock
certificate for the excess.
[ ] Cash From Broker: by delivering the exercise price and the required
tax withholding amount from ________________________________, a
broker, dealer or other "creditor" as defined by Regulation T
issued by the Board of Governors of the Federal Reserve System (the
"Broker"). I authorize ePlus to (i) create an account for me with
the Broker into which the Option shares shall be delivered, (ii)
issue a stock certificate in my name for the number of shares
indicated above, and (iii) deliver such stock certificate directly
to the Broker for deposit into my account upon receiving the
exercise price and the required tax withholding amount from the
Broker.
2. Withholding Taxes. On or before the Exercise Date, I will satisfy my
tax withholding obligations in the form specified below (check one):
[ ] Cash Only: by delivering a check to ePlus for the full tax
withholding amount.
[ ] Cash and Shares: by delivering a check to ePlus for part of the tax
withholding amount. I will pay the balance of the tax withholding
amount by delivering to ePlus shares of ePlus Stock that I have
owned for at least six months, which shares have a Fair Market
Value as of the Exercise Date equal to the balance of the required
tax withholding amount. (Such delivery may be made by attestation
of my ownership or by actual delivery of one or more stock
certificates duly endorsed for transfer.)If the number of shares of
ePlus Stock so delivered exceeds the number needed to pay the tax
withholding amount, ePlus will issue me a new stock certificate for
the excess.
[ ] Shares Only: by delivering to ePlus shares of ePlus Stock that I
have owned for at least six months, which shares have a Fair Market
Value as of the Exercise Date equal to the required tax withholding
amount. (Such delivery may be made by attestation of ownership or
by actual delivery of one or more stock certificates duly endorsed
for transfer.) If the number of shares of ePlus Stock so delivered
exceeds the number needed to pay the tax withholding amount, ePlus
will issue me a new stock certificate for the excess.
[ ] Withholding of Shares to Cover Minimum Obligation: by having ePlus
withhold shares of Stock from the Option having a Fair Market Value
on the date of withholding equal to the minimumm amount (and not
any greater amount) required to be withheld for tax purposes.
[ ] Cash From Broker: I elected under Paragraph 1 of this notice to pay
BOTH the exercise price of the Option and the required tax
withholding amount in a broker-assisted cashless exercise.
Please deliver the stock certificate to me (unless I have chosen to pay
the exercise price and tax withholding through a broker).
Very truly yours,
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AGREED TO AND ACCEPTED:
ePlus inc.
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By: _____________________________________
Title: __________________________________
Number of Option Shares
Exercised: ______________________________
Number of Option Shares
Remaining: ______________________________
Date: ___________________________________
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