ANALEX CORPORATION
OPTION EXCHANGE AND STOCK APPRECIATION RIGHT AGREEMENT
This OPTION EXCHANGE AND STOCK APPRECIATION RIGHT AGREEMENT
(the "Agreement") is made as of January 13, 2006 (the "Grant
Date") between ANALEX CORPORATION, a Delaware corporation (the
"Company") and Sterling E. Phillips, Jr. (the "Grantee").
Background Information
A. On January 16, 2001, the Grantee received stock option
to purchase 875,725 shares of the common stock, par value $0.02,
of the Company (the "Common Stock") at an exercise price of
$1.375 per share (the "Option").
B. The Compensation Committee of the Board of Directors of
the Company (the "Committee") has determined that it is in the
best interests of the Company to grant a stock appreciation right
to the Grantee in exchange for the Option.
C. The Grantee desires to accept a stock appreciation
right in exchange for the Option and agrees to be bound by the
terms and conditions of this Agreement.
Agreement
1. Grant of Stock Appreciation Right. Subject to the
terms and conditions provided in this Agreement, and in exchange
for the Option, the Company hereby grants to the Grantee a stock
appreciation right covering 875,725 shares of Common Stock (the
"SAR"), effective as of the Grant Date.
2. Exercise Price. The exercise price of the shares of
Common Stock covered by the SAR shall be $1.375 per share (the
"Exercise Price").
3. Settlement of SAR. Upon exercise of all or a specified
portion of the SAR, the Grantee shall be entitled to receive from
the Company shares of Common Stock with an aggregate fair market
value on the date of exercise of the SAR equal to the amount
determined by multiplying:
(a) 100 percent of the amount (if any) by which the
fair market value of a share of Common Stock on the date of
exercise of the SAR exceeds the Exercise Price, by
(b) the number of shares of Common Stock with respect
to which the SAR shall have been exercised.
4. Vesting and Term of SAR. The SAR shall be fully vested
and exercisable during its term. The term of the SAR commences
on the Grant Date and expires at 5:00 p.m. on January 16, 2006.
5. Exercise of SAR. The SAR is exercisable by delivery of
an exercise notice, at such location and in such form as the
Company shall designate, which shall state the election to
exercise the SAR, the number of shares in respect of which the
SAR is being exercised, and such other representations and
agreements as may be required by the Company. This SAR shall be
deemed to be exercised upon receipt by the Company of such
exercise notice. No shares shall be issued pursuant to the
exercise of this SAR unless such issuance and exercise complies
with all relevant provisions of law and the requirements of any
stock exchange or quotation service upon which the shares are
then listed. Assuming such compliance, for income tax purposes
the exercised shares shall be considered transferred to the
Grantee on the date the SAR is exercised with respect to such
exercised shares. Prior to the exercise of this SAR and delivery
of the resulting shares, the Grantee shall not have any rights of
a stockholder with respect to this SAR or the shares subject to
this SAR.
6. Non-Transferability of SAR. The SAR may not be
transferred in any manner otherwise than by will or by the laws
of descent or distribution, except as otherwise permitted by the
Committee.
7. Tax Withholding. At such time as the Grantee exercises
the SAR, the Grantee must satisfy the federal, state, and local
income and social insurance withholding taxes imposed by reason
of the exercise of the SAR. Unless the Grantee delivers to the
Company at the time of exercise of the SAR a certified check
payable in the amount of all tax withholding obligations imposed
on the Grantee and the Company by reason of the exercise of the
SAR, the number of shares to be delivered to the Grantee upon
exercise of the SAR shall be reduced by the smallest number of
whole shares which, when multiplied by the fair market value of
the Common Stock on the date of exercise, is sufficient to
satisfy the amount of such tax withholding obligations.
8. No Effect on Employment. Nothing in this Agreement
shall confer upon the Grantee the right to continue in the
employment of the Company or affect any right which the Company
may have to terminate the employment of the Grantee regardless of
the effect of such termination of employment on the rights of the
Grantee under this Agreement.
9. Rights Prior to Issuance of Certificates. The Grantee
shall not have any of the rights of a shareholder with respect to
any shares issuable upon exercise of the SAR until the date of
issuance to the Grantee of a certificate for such shares.
10. Governing Law and Severability. This Agreement shall
be construed and enforced in accordance with the laws of the
State of Delaware. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in
any respect, the same shall not invalidate or otherwise affect
any other provisions of this Agreement, and this Agreement shall
be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
11. Successors. This Agreement shall inure to the benefit
of, and be binding upon, the Company and the Grantee and their
heirs, legal representatives, successors and permitted assigns.
12. Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties hereto with respect to
such terms, restrictions and limitations.
13. Headings. Section headings used herein are for
convenience of reference only and shall not be considered in
construing this Agreement.
14. Additional Acknowledgements. By their signatures below,
the Grantee and the Company agree that the SAR is granted under
and governed by the terms and conditions of this Agreement. The
Grantee has had an opportunity to obtain the advice of counsel
prior to executing this Agreement and fully understands all
provisions of this Agreement. Grantee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of
the Committee made in accordance with the terms of this Agreement
upon any questions relating to this Agreement.
IN WITNESS WHEREOF, the Company and the Grantee have executed
this Agreement as of the Grant Date set forth above.
ANALEX CORPORATION
By: /S/ C. WAYNE GRUBBS
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C. Wayne Grubbs, Senior Vice President
and Chief Financial Officer
GRANTEE: /S/ STERLING E. PHILLPS, JR.
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Sterling E. Phillips, Jr.