Exhibit 4.5


 


1998 DIGITAL
FUSION, INC. STOCK OPTION PLAN


 


1.                   Purpose.


 


The purposes of the 1998 Digital Fusion, Inc.
Stock Option Plan (the “Plan”) are to advance the interests of Digital Fusion, Inc.
(“Digital Fusion”) and its stockholders by providing incentives and rewards to
those individuals who are in a position to contribute to the long-term growth
and profitability of Digital Fusion and any present or future subsidiaries and
affiliates of Digital Fusion (collectively, the “Company”); to assist the Company
in attracting, retaining and motivating highly qualified employees for the
successful conduct of their business; and to make the Company’s compensation
program competitive with those of other similar employers.


 


2.                   Definitions.


 


2.1 “Award” means an award
or grant made to a Participant under the Plan.


 


2.2 “Award Agreement” means the
agreement provided in connection with an Award under the Plan.


 


2.3 “Award Date” means the date that an
Award is made, as specified in the Award Agreement.


 


2.4 “Board” means the Board of Directors
of Digital Fusion.


 


2.5 A “Change in Control” shall be
deemed to occur in the event that any of the following circumstances have
occurred:


 


(i) Any “person” or “group”
within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act
(a) becomes the “beneficial owner”, as defined in Rule 13d-3 under
the Exchange Act, of 50% or more of the combined voting power of Digital Fusion’s
then outstanding securities, otherwise than through a transaction or series of
related transactions arranged by, or consummated with the prior approval of,
the Board of Directors of Digital Fusion (hereinafter referred to as the “Board”)
or (b) acquires by proxy or otherwise the right to vote 50% or more of the
then outstanding voting securities of Digital Fusion, otherwise than through an
arrangement or arrangements consummated with the prior approval of the Board
for the election of directors, for any merger or consolidation of Digital
Fusion or for any other matter or question.


 


(ii) During any period of 24
consecutive months (not including any period prior to the adoption of this
section), Present Directors and/or New Directors cease for any reason to
constitute a majority of the Board. For purposes of the preceding sentence, “Present
Directors” shall mean individuals who at the beginning of such consecutive 24
month period were members of the Board and “New Directors” shall mean any
director whose election by the Board or whose nomination for election by
Digital Fusion’s stockholders was approved by a vote of at least two-thirds of
the directors then still in office who were Present Directors or New Directors.


 


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(iii) Consummation of (a) any
consolidation or merger of Digital Fusion in which Digital Fusion is not the
continuing or surviving corporation or pursuant to which shares of Stock would
be converted into cash, securities or other property, other than a merger of
Digital Fusion in which the holders of Stock immediately prior to the merger
have the same proportion and ownership of common stock of the surviving
corporation immediately after the merger or (b) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of Digital Fusion; provide, that, the
divestiture of less than substantially all of the assets of Digital Fusion in
one transaction or a series of related transactions, whether effected by sale,
lease, exchange, spin-off, sale of the stock or merger of a subsidiary or
otherwise, shall not constitute a Change in Control.


 


For purposes of this Section 2.5, the rules of
Section 318(a) of the Code and the regulations issued thereunder
shall be used to determine stock ownership.


 


2.6 “Code” means the Internal Revenue
Code of 1986, as now or hereafter amended.


 


2.7 “Committee” means the members of the
Board appointed by the Board to administer the Plan pursuant to Section 4,
or if no such Committee is appointed, the full Board.


 


2.8 “Disability” means a Participant’s
inability to engage in any substantial gainful activity because of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted, or can be expected to last, for a
continuous period of 12 months or longer. A Participant shall not be considered
to be disabled hereunder unless the Participant furnishes proof of the
existence thereof in such form and manner, and at such times, as the Committee
may require.


 


2.9 “Employee” means all employees of the
Company, including officers of the Company, as well as officers of the Company
who are also directors of the Company.


 


2.10 “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


2.11 “Fair Market Value” for purposes of
the Plan, unless otherwise required by any applicable provision of the Code or
any regulation issued thereunder, means, as of any date, the mean of the high
and low prices reported per share of Stock on the applicable date (i) as
reported by the principal national securities exchange in the United States on
which the Stock then traded or (ii) if not traded on any such national
securities exchange, as quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market (collectively, the “Nasdaq Markets”) (or, if the Stock has not
been reported or quoted on such date, on the first day prior thereto on which
the Stock was reported or traded). If the Stock is not readily tradable on a
national securities exchange or a Nasdaq Market, its Fair Market Value shall be
set in good faith by the Committee.


 


2.12 “Incentive Stock Option” or “ISO”
means any Stock Option granted pursuant to this Plan which is designated in an
Award Agreement as such by the Committee and which complies with Section 422
of the Code.


 


2.13 “Non-Qualified Stock Option” means
any Stock Option granted pursuant to this Plan which is not an Incentive Stock
Option.


 


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2.14 “Option Price” means the purchase
price of one share of Stock under a Stock Option.


 


2.15 “Settlement Date” means, with
respect to any Stock Option that has been exercised in whole or in part, the
date or dates upon which shares of Stock are to be delivered to the Participant
and the Option Price therefore paid.


 


2.16 “Stock” means the Common Stock, par
value $.01 per share, of Digital Fusion.


 


2.17 “Stock Option” or “Option” means an
Award that entitles a Participant to purchase a share of Stock.


 


3.                   Participation.


 


The participants in the Plan (“Participants”)
shall be (a) all Employees, (b) directors of the Company and (c) such
other persons or entities which provide services to the Company which are
selected to participate in the Plan by the Committee.


 


4.                   Administration.


 


The Plan shall be administered by the
Committee. Except as otherwise provided herein, the Committee shall have full
power to: (i) interpret the Plan; (ii) determine who is eligible to
be a Participant in the Plan; (iii) select Award recipients; (iv) set
the terms and conditions of Awards; (v) establish administrative
regulations to further the purpose of the Plan; and (vi) take any other
action desirable or necessary to interpret, construe or implement properly the
provisions of the Plan. All decisions and acts of the Committee shall be final
and binding upon all Participants.


 


5.                   Awards.


 


5.1 Types of Awards. Awards
are to be in the form of Stock Options.


 


5.2 Award Agreements. All Awards shall
be made pursuant to Award Agreements between the Participant and the Company.
Award Agreements shall set forth the details, conditions and limitations for
each Award, which may include the term of the Award, the provisions applicable
in the event the Participant’s employment or service to the Company terminates,
and the Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind any Award. In addition, the Award Agreement may include
provisions relating to control of the Company and future issuances by the
Company of debt and equity securities, such as “drag along” rights, “tag along”
rights, “lock up” or “holdback” provisions in connection with
recapitalizations, reorganizations, acquisitions, divestitures,
debt-financings, private placements of the Company’s securities, public
offerings of the Company’s securities and “voting agreement” provisions which
the Company deems necessary or appropriate in good faith. The Award Agreements
shall be in such form as the Committee approves from time to time.


 


5.3 Maximum Number of Shares Available.
The total number of shares of Stock optioned or granted under the Plan shall
not exceed 330,000 shares. If an Award expires unexercised or is forfeited,
surrendered, cancelled, or settled in cash in lieu of Stock, shares of Stock
previously set aside for such Awards shall be available for distribution in
connection with future Awards.


 


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5.4 Adjustment in the Event of
Recapitalization, etc. In the event of any change in the outstanding shares of
Digital Fusion by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, combination or exchange of shares or other similar
corporate change or in the event of any special distribution to the
stockholders, the Committee shall make such equitable adjustments in the number
of shares and prices per share applicable to Awards then outstanding and in the
number of shares which are available thereafter for Awards as the Committee
determines are necessary and appropriate. Any such adjustment shall be
conclusive and binding for all purposes of the Plan.


 


6.                   Stock Options.


 


6.1 Grant of Award. Stock Options may be
awarded to any Participant. Except as otherwise provided below, Awards of Stock
Options shall be subject to such terms and conditions as are established by the
Committee and set forth in the Award Agreement. The Committee shall determine
with respect to each Award of Stock Options and designate in the Award
Agreement whether a Participant is to receive Incentive Stock Options or
Non-Qualified Stock Options.


 


6.2 Option Price. The exercise price of
each share of Stock subject to a Stock Option shall be specified in the grant.
Notwithstanding the foregoing, no Stock Option shall be awarded which has an
exercise price less than the Fair Market Value of the Stock on the date of
grant, if such grant date is subsequent to an initial public offering of Stock
by the Company. Additionally, if the Participant to whom an ISO is granted
owns, at the date of grant, more than ten percent (10%) of the combined voting
power of the Company, the exercise price of the ISO subject to such grant shall
be not less than one hundred ten percent (110%) of the Fair Market Value.


 


6.3 Vesting and Exercisability of
Options. A Stock Option by its terms shall not be exercisable after such period
as determined by the Committee, provided, that, in no event shall a Stock
Option be exercisable after the expiration of ten (10) years from the date
such option is granted, except than an ISO granted to a Participant who, at the
date of grant, owns Stock representing more than ten percent (10%) of the combined
voting power of the Participating Company shall by its terms not be exercisable
after the expiration of more than five (5) years from the date such Option
is granted.


 


Subject to the preceding paragraph and except
as otherwise provided herein, an Option shall be only exercisable by a
Participant while the Participant is actively employed by or providing service
to the Company, except: (i) in the case of a Participant’s death in which
event an Option may be exercised by the executor or administrator of Participant’s
estate or Participant’s distributee during the three (3) month period
commencing on the date of Participant’s death; (ii) during the three (3) month
period commencing on the date of a Participant’s Disability or termination of
service or employment by the Company other than for cause; (iii) during
the three (3) month period commencing on the date of the Participant’s
termination of service or employment, by the Participant or the Company, after
a Change in Control, unless such termination of employment is for cause; or (iv) if
the Committee decides


 


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that it is in the best interest of the
Company to permit individual exceptions. For purposes hereof, cause shall mean:
(i) the disclosure or misuse of confidential information or trade secrets;
(ii) activities in violation of Company policies; (iii) the violation
or breach of any material provision in any employment contract or agreement
between a Participant and any Company; (iv) engaging in conduct relating
to the Participant’s service to or employment with the Company for which either
criminal or civil penalties may be sought; and (v) engaging in activities
which adversely affects or which are inimical, contrary or harmful to the
interest of the Participating Company or its business operations. An Option may
not be exercised pursuant to this paragraph after the expiration date of the
Option. Notwithstanding the foregoing, an Incentive Stock Option may not be
exercised more than 12 months after a Participant’s employment terminates due
to disability or three (3) months after such employment terminates for any
other reason.


 


6.4 Exercise of Option. Subject to the
terms and conditions hereof and the terms and conditions specified in the
respective Award Agreement, an Option may be exercised with respect to part or
all of the shares subject to the Option by giving written notice to the Company
of the exercise of the Stock Option. The Option Price for the shares for which
an Option is exercised shall be paid within ten business days after the date of
exercise in cash, in whole shares of Stock, in a combination of cash and such
shares of Stock, or in any other manner that the Committee may approve. The
value of any share of Stock delivered in payment of the Option Price shall be
its Fair Market Value on the date the Option is exercised.


 


6.5 Limitation Applicable to ISOs. The
aggregate Fair Market Value of all shares of Stock with respect to which
Incentive Stock Options are exercisable for the first time by a Participant in
any one calendar year, under the Plan or any other stock option plan maintained
by the Company, shall not exceed $100,000. The fair market value of such shares
of Stock shall be the Fair Market Value on the date the related Stock Option is
granted.


 


7.                   Settlement of Awards.


 


At the Committee’s discretion, Awards may be
settled in cash, shares of Stock, or any combination thereof. The Committee may
(i) require or permit Participants to defer the issuance or vesting of
shares of Stock or the settlement of Awards in cash and (ii) provide that
deferred settlements include the payment or crediting of interest on deferred
amounts.


 


8.                   General Provisions.


 


8.1 Transferability of Awards. Awards
under the Plan shall not be transferable otherwise than by will or the laws of
descent and distribution, unless otherwise determined by the Committee.


 


8.2 Unfunded Plan. Nothing contained
herein shall require the Company to segregate any monies from its general
funds, or to create any trusts, or to make any special deposits for any
immediate or deferred amounts payable to any Participant for any year.


 


8.3 No Right to Employment.
Participation in this Plan shall not affect the Company’s right to discharge a
Participant or constitute an agreement of employment between a Participant and
the Company.


 


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8.4 Rights as a Stockholder. Except as
otherwise provided in any Award Agreement, a Participant shall have no rights
as a stockholder of Digital Fusion until he or she becomes the holder of record
of Stock.


 


8.5 Applicable Law. The validity,
construction and effect of the Plan, and any actions taken or relating to the
Plan, shall be determined in accordance with applicable federal law and the
laws of the state in which the Company is incorporated.


 


8.6 Successors and Assigns. The Plan and
any Award Agreement shall be binding on all successors and assigns of a
Participant, including, without limitation, the estate of the Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant’s creditors.


 


9.                   Amendment, Suspension, or Termination.


 


The Board may suspend, terminate, or amend
the Plan, including but not limited to such amendments as may be necessary or
desirable resulting from changes in the federal income tax laws and other
applicable laws, but may not, without approval by the holders of a majority of
all outstanding shares entitled to vote on the subject at a meeting of stockholders
of Digital Fusion, increase the total number of shares of Stock that may be
optioned or granted under the Plan.


 


10.            Tax Withholding.


 


The Company shall have the right to (i) require
that shares of Stock be withheld in an amount sufficient to satisfy withholding
of any federal, state or local taxes required by law and (ii) take such
other action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding shall be satisfied. The date the Option is exercised shall be the
date used for purposes of determining the Fair Market Value of the shares of
Stock used to satisfy the required tax withholding.


 


11.            Effective Date and Duration of the Plan.


 


The Plan shall be effective on the date of
the approval of the Plan by the holders of a majority of the issued and
outstanding shares of Stock and shall terminate on the tenth anniversary of the
effective date. The Plan shall be null and void and of no effect if the
foregoing condition is not fulfilled, and in such event each Stock Option
granted hereunder shall, notwithstanding any of the preceding provisions of the
Plan, be null and void and of no effect.


 


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