Exhibit 10.21

 

OPTION CANCELLATION AGREEMENT

 

THIS OPTION CANCELLATION AGREEMENT (this “Agreement”) is entered into as of
January 31, 2005 among Science Applications International Corporation, a
Delaware corporation (“SAIC”), Telcordia Technologies, Inc., a Delaware
corporation (“Telcordia”) and Matthew J. Desch (“Option Holder”).

 

R E C I T A L S

 

WHEREAS, Option Holder is an employee of Telcordia or one of its subsidiaries
and holds options to purchase SAIC Class A common stock (“SAIC Stock”), which
options were issued pursuant to SAIC’s 1999 Stock Incentive Plan.

 

WHEREAS, SAIC owns one hundred percent (100%) of the outstanding capital stock
of Telcordia, and SAIC intends to complete a sale of all or a controlling
interest in Telcordia (the “Transaction”).

 

WHEREAS, if a Transaction is completed in accordance with the definitive
agreement or agreements relating thereto (the “Closing”), Telcordia will no
longer be a subsidiary or an affiliate of SAIC effective upon the date of the
Closing (the “Termination Date”).

 

WHEREAS, because Telcordia will no longer be affiliated with SAIC upon the
Closing, all vested options held by Option Holder as of the Termination Date
(the “Vested Options”) will have to be exercised within the thirty (30) day
period following notice to Option Holder from SAIC or, at the end of such thirty
(30) day period, all Vested Options which have not been exercised will
terminate. All unvested options issued to Option Holder will be forfeited as of
the Termination Date.

 

WHEREAS, Option Holder may exercise vested options by either payment of cash or
by exchanging vested SAIC Stock that Option Holder owns; provided, however that
shares acquired through the exercise of a stock option must be owned for at
least six months before they may be used as payment to exercise an option.

 

WHEREAS, in the event a Transaction is completed, SAIC is allowing Option Holder
to elect to cancel all the Vested Options in exchange for the right to receive a
cash payment in an amount equal to (A) the product of (1) the number of shares
of SAIC Stock issuable upon the exercise of each of the Vested Options and (2)
the price per share of SAIC Stock as of the Closing minus the per share exercise
price for each such Option, and minus (B) all applicable federal, state and
local taxes required to be withheld in respect of such payment.

 

A G R E E M E N T

 

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:

 

1. Cancellation of Vested Options. Option Holder agrees and is hereby
surrendering all Vested Options outstanding as of the Closing for cancellation
effective immediately after the Closing. In exchange for the cancellation of the
Vested Options, Option Holder shall be entitled to receive an amount in cash
equal to (A) the product of (1) the number of shares of SAIC Stock issuable upon
the exercise of each of the Vested Options and (2) the price per share of SAIC
Stock as of the Closing minus the per share exercise price for each such Option,
and minus (B) all applicable federal, state and local taxes required to be
withheld in respect of such payment (the “Payment”). For example, assuming that
price per share of SAIC Stock as of the Closing is $38.14, cancellation of 500
options with a per share exercise price of $29.52 and 1000 options with a per
share exercise price of $30.83 would result in a payment of $11,620, less
applicable tax withholdings. [(500 x [$38.14 – $29.52]) + (1000 x [$38.14 –
$30.83]) = $11,620]. All unvested options held by Option Holder as of the
Closing are forfeited as of the Closing. All stock option agreement(s) that
govern the terms of the Vested Options and any unvested options shall be
terminated effective immediately after the Closing.

 

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2. Agreement Not to Exercise. Option Holder’s election to receive cash in
exchange for cancellation shall apply to all Vested Options held by Option
Holder as of the Closing. Option Holder agrees not to exercise any of the Vested
Options on or after the Termination Date and further agrees that any attempt to
exercise any of the Vested Options on or after the Termination Date shall be
null and void.

 

3. Representations and Warranties of Option Holder. Option Holder hereby
represents, warrants and covenants that: (a) Option Holder is the sole
beneficial and record owner and holder of the Vested Options, which Vested
Options are free and clear of any liens, claims, options, charges, third party
rights or other encumbrances (including, without limitation, restrictions on
rights of disposition other than those imposed by applicable laws); (b) Option
Holder has full power and authority to make, enter into and carry out the terms
of this Agreement; (c) Option Holder has duly executed and delivered this
Agreement; and (d) this Agreement constitutes a valid and binding obligation of
Option Holder.

 

4. Further Assurances. Option Holder hereby covenants and agrees to execute and
deliver any additional documents and take any other actions necessary or
desirable to carry out the purpose and intent of this Agreement, including,
without limitations, any actions required to cancel the Vested Options.

 

5. Payment and Withholding.

 

(a) The Payment shall be made by Telcordia to Option Holder promptly after
Closing but in no event later than 30 days after the Termination Date. Option
Holder agrees that Telcordia, SAIC, or their respective successors or
affiliates, shall be entitled to deduct and withhold from the Payment such
amounts that Telcordia, SAIC, their respective successors or affiliates are
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code, Treasury Regulations or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld, such amounts
shall be treated for all purposes of this Agreement as having been paid to
Option Holder in respect of which such deduction and withholding was made.

 

(b) SAIC shall reimburse Telcordia for the amount of the payment made to the
Option Holder prior to Option Holder’s tax withholdings no later than the date
Payment is made by Telcordia to the Option Holder. Telcordia shall make all
required tax withholdings from the Payment to Option Holder and submit all taxes
due with respect to the Payment to the proper taxing authorities in a timely
manner.

 

6. Release. In return for part of the consideration provided to Option Holder
pursuant to this Agreement, Option Holder hereby waives, releases and forever
discharges SAIC, Telcordia, their respective subsidiaries, affiliates,
successors and assigns and their current and former officers, directors,
stockholders, agents, employees, attorneys, representatives and employee benefit
programs (including the trustees, administrators, fiduciaries and insurers of
such programs) (collectively referred to as the “Releasees”) from any claims and
potential claims for relief, causes of action and liabilities, known or unknown,
that Option Holder may have against Releasees or relating to (i) the employment
relationship between Option Holder and Telcordia, (ii) Option Holder’s
affiliation with SAIC and the termination of that affiliation, including any and
all claims, rights and any personal gain with respect to any claim arising under
the provisions of the False Claims Act, 3 1 U.S.C. 3730 and (iii) Option
Holder’s ownership of SAIC stock or options or Option Holder’s participation in
any SAIC or Telcordia benefit or stock plan. This release applies to all such
claims relating to any event, state of facts, circumstance or condition
occurring or existing on or prior to the Termination Date, and this release will
be effective as of the Effective Date (as defined herein). The foregoing release
shall not be a release of Option Holder’s rights under the Executive Change in
Control, Incentive and Severance Agreement dated September 20, 2004 between
Option Holder and Telcordia, or any rights Option Holder may have to
indemnification or directors and officers liability insurance coverage. Any
dispute of any nature arising out of or relating to this Agreement or any
dispute which may arise in the future shall be settled in a final and binding
arbitration administered by Judicial Arbitration and Mediation Services, Inc.
(JAMS).

 

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7. Entire Agreement. This Agreement constitutes the final, complete and
exclusive agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by an officer, employee or representative of any party hereto.

 

8. Governing Law. This Agreement shall be deemed to have been entered into in
the State of California, and all questions of the validity, interpretation, or
performance of any of its terms or of any rights or obligations of the parties
to this Agreement shall be governed by California law.

 

9. Amendment. This Agreement may be amended, modified and supplemented only by
written agreement between the parties hereto which states that it is intended to
be a modification of this Agreement.

 

10. Notices. Any notice required or permitted to be given to any party under
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally, delivered by reputable overnight courier or received by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party to whom such notice is to be given at the party’s address
set forth below or as such party shall otherwise direct by written notice given
pursuant to this Section 10:

 

To SAIC:

  

Science Applications International Corporation

    

10260 Campus Point Drive, M/S F1

    

San Diego, California 92121

    

Attention: Director Stock Programs

With copy to:

  

Science Applications International Corporation

    

10260 Campus Point Drive, M/S F3

    

San Diego, California 92121

    

Attention: General Counsel

To Telcordia:

  

Telcordia Technologies, Inc.

    

1 Telcordia Drive, Room 5J100

    

Piscataway, New Jersey 08854

    

Attention: Joseph Giordano, Esq.

To Option Holder:

  

At Option Holder’s address of record with SAIC

    

Stock Programs

 

11. Effective Date. This Agreement shall not become effective unless and until
the following: (a) the Closing occurs; (b) Option Holder is an employee of
Telcordia or one of its subsidiaries on the Termination Date; (c) as of the
Termination Date, Option Holder holds Vested Options (the “Effective Date”).

 

12. Termination. If the Effective Date has not occurred on or prior to September
30, 2005, this Agreement shall terminate in its entirety and be of no further
force or effect.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Option Cancellation
Agreement to be executed as of the day and year first above written.

 

“Option Holder”

 

/s/    MATTHEW J. DESCH                        

Signature

 

Printed Name: Matthew J. Desch                

 

Account Number:_XXX-XX-5094-01            

 

Email Address: mdesch@telcordia.com          

 

Date: Jan. 19, 2005  

 

SCIENCE APPLICATIONS

INTERNATIONAL CORPORATION

 

By: /s/    DOUGLAS E. SCOTT                        

Name: Douglas E. Scott                                      

Title:  Senior Vice President, Secretary

      and General Counsel

 

TELCORDIA TECHNOLOGIES, INC.

 

By: /s/    JOSEPH L. WALSH                            

Name: Joseph L. Walsh

Title:  Senior Vice President

      and Chief Financial Officer

 

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