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Exhibit 10.37
EDGEWATER TECHNOLOGY, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
SECTION 1. PURPOSE. The Plan (i) authorizes the Committee to provide to
Employees and Consultants of the Corporation and its Subsidiaries, who are in a
position to contribute materially to the long-term success of the Corporation,
with options to acquire Common Stock, par value $.01 per share, of the
Corporation, and (ii) provides for the automatic grant of options to Non-
Employee Directors of the Corporation in accordance with the terms specified
herein. The Corporation believes that this incentive program will cause those
persons to increase their interest in the Corporation's welfare, and aid in
attracting and retaining Employees, Consultants and Directors of outstanding
ability.
SECTION 2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth in
this Section:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Corporation or an employee
benefit plan of the Corporation, acquires directly or indirectly the
Beneficial Ownership of any voting security of the Corporation and
immediately after such acquisition such Person is, directly or
indirectly, the Beneficial Owner of voting securities representing 50%
or more of the total voting power of the then-outstanding voting
securities of the Corporation;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board and whose election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election)(such individuals being the "Continuing
Directors"), cease for any reason to constitute a majority of the
members of the Board;
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(iii) the stockholders of the Corporation shall approve a
merger, consolidation, recapitalization, or reorganization of the
Corporation, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Corporation immediately prior to
the transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Corporation shall approve a plan
of complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or a substantial portion
of the Corporation's assets (i.e. 50% or more of the total assets of
the Corporation).
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(d) "Committee" shall mean the Board, or any committee of two or more
Directors that may be designated by the Board to administer the Plan. The
Committee may be comprised of "non-employee directors" within the meaning
of Rule 16b-3 under the Exchange Act and "outside directors" under section
162(m) of the Code.
(e) "Consultant" shall mean (i) any person who is engaged to perform
services for the Corporation or its Subsidiaries, other than as an Employee
or Director, or (ii) any person who has agreed to become a consultant
within the meaning of clause (i).
(f) "Control Person" shall mean any person who, as of the date of
grant of an Option, owns (within the meaning of Section 422(b)(6) of the
Code) stock possessing more than ten percent (10%) of the total combined
voting power or value of all classes of stock of the Corporation or of any
Parent or "subsidiary corporation" (within the meaning of Section 424(f) of
the Code).
(g) "Corporation" shall mean Edgewater Technology, Inc., a Delaware
corporation.
(h) "Director" shall mean any member of the Board.
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(i) "Employee" shall mean (i) any employee of the Corporation or its
Subsidiaries (including Directors who are otherwise employed by the
Corporation or its Subsidiaries), or (ii) any person who has agreed to
become an employee within the meaning of clause (i).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934 as
it may be amended from time to time.
(k) "Fair Market Value" of the Stock on a given date shall be based
upon: (i) if the Stock is listed on a national securities exchange or
quoted in an interdealer quotation system, the last sales price or, if
unavailable, the average of the closing bid and asked prices per share of
the Stock on such date (or, if there was no trading or quotation in the
Stock on such date, on the next preceding date on which there was trading
or quotation) as provided by one of such organizations; or (ii) if the
Stock is not listed on a national securities exchange or quoted in an
interdealer quotation system, as determined by the Board in good faith in
its sole discretion, provided, however, that the "fair market value" of
Stock on the date on which shares of Stock are first issued and sold
pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission shall be the Initial Public Offering
price of the shares so issued and sold, as set forth in the first
prospectus used in such offering.
(l) "Grantee" shall mean a person granted an Option under the Plan.
(m) "Initial Public Offering" shall mean an initial public offering
of shares of Stock in a firm commitment underwriting registered with the
Securities and Exchange Commission in compliance with the provisions of the
1933 Act.
(n) "ISO" shall mean an Option granted pursuant to the Plan to
purchase shares of Stock and intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.
(o) "1933 Act" shall mean the Securities Act of 1933, as amended.
(p) "Non-Employee Director" shall mean a Director of the Corporation
who is not an Employee, and who was not an Employee at any time during the
prior one [-]year period.
(q) "NQSO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock that are not ISOs.
(r) "Options" shall refer collectively to NQSOs and ISOs issued under
and subject to the Plan.
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(s) "Parent" shall mean any parent corporation as defined in Section
424(e) of the Code.
(t) "Plan" shall mean this Amended and Restated 1996 Stock Option
Plan as set forth herein and as amended from time to time.
(u) "Stock" shall mean shares of the common stock of the Corporation.
(v) "Stock Option Agreement" shall mean a written agreement between
the Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(w) "Subsidiary" shall mean (i) any company (whether a corporation,
partnership, joint venture or other entity) in which the Company owns,
directly or indirectly, a majority of the shares of capital stock or other
equity interest, or (ii) any entity which the Committee reasonably expects
to become a subsidiary within the meaning of clause (i).
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to adjustment as
described in section 10, the total amount of Stock that may be subject to
outstanding Options, determined immediately after the grant of any Option, shall
not exceed 15% percent of the total number of shares of Stock outstanding.
Notwithstanding the foregoing, subject to adjustment as described in section 10,
the number of shares that may be delivered upon exercise of ISOs shall not
exceed 650,000. For purposes of the foregoing limits, shares subject to Options
shall not be deemed delivered if such Options are forfeited, expire or otherwise
terminate without delivery of shares to the Grantee. Any shares of Stock
delivered pursuant to an Option may consist, in whole or in part, of authorized
and unissued shares or treasury shares.
SECTION 4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan, the Committee shall
have the authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
Stock Option Agreements thereunder and to make all other determinations
necessary or advisable for the administration of the Plan. Any controversy or
claim arising out of or related to this Plan or the Options granted thereunder
shall be determined unilaterally by, and at the sole discretion of, the
Committee. Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Corporation, Subsidiaries
of the Corporation, Grantees, and any person claiming any rights under the Plan
from or through any Grantee and stockholders. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not
be construed as limiting any power or authority of the Committee. The Committee
may delegate to officers or managers of the Corporation or any Subsidiary the
authority, subject to such terms as the Committee shall determine, to perform
administrative
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functions to the extent permitted under Rule 16b-3, if applicable, Code section
162(m), and other applicable law.
SECTION 5. TYPES OF OPTIONS. Options granted under the Plan may be of two
types: ISOs or NQSOs. The Committee shall have the authority and discretion to
grant to an eligible Employee either ISOs, NQSOs or both, but shall clearly
designate the nature of each Option at the time of grant in the Stock Option
Agreement.
SECTION 6. GRANT OF OPTIONS TO EMPLOYEES AND CONSULTANTS.
(a) Employees and Consultants of the Corporation and its Subsidiaries
shall be eligible to receive Options under the Plan. Grantees who are not
employees of the Corporation or a "subsidiary corporation" (within the
meaning of Section 424(f) of the Code) on the date an Option is granted
shall only receive NQSOs.
(b) The exercise price per share of Stock subject to an Option
granted to an Employee or Consultant shall be determined by the Committee
and specified in the Stock Option Agreement, provided, however, that the
exercise price of each share subject to an Option shall be not less than
100%, or, in the case of an ISO granted to a Control Person, 110% of the
Fair Market Value of a share of the Stock on the date such Option is
granted.
(c) The term of each Option granted to an Employee or Consultant
shall be determined by the Committee and specified in a Stock Option
Agreement, provided that no Option shall be exercisable more than ten years
from the date such Option is granted, and provided further that no ISO
granted to a Control Person shall be exercisable more than five years from
the date of the Option grant.
(d) The Committee shall determine and designate from time to time
Employees or Consultants who are to be granted Options, and shall specify
in the Stock Option Agreement the nature of each Option granted and the
number of shares of Stock subject to each such Option, provided, however,
that in any calendar year, no Employee or Consultant may be granted an
Option to purchase more than 500,000 shares of Stock (determined without
regard to when such Option is exercisable), subject to adjustment pursuant
to Section 10.
(e) Notwithstanding any other provisions hereof, the aggregate Fair
Market Value (determined at the time the ISO is granted) of the Stock with
respect to which ISOs are exercisable for the first time by any Employee
during any calendar year under all plans of the Corporation and any Parent
or "subsidiary corporation" (within the meaning of Section 424(f) of the
Code) shall not exceed $100,000. To the extent the limitation set forth in
the preceding sentence is exceeded, the Options with respect to such excess
shall be treated as NQSOs.
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(f) The Committee shall determine whether any Option granted to an
Employee or Consultant shall become exercisable in one or more installments
and specify the installment dates in the Stock Option Agreement. The
Committee may also specify in the Stock Option Agreement such other
provisions, not inconsistent with the terms of this Plan, as it may deem
desirable, including such provisions as it may deem necessary to qualify
any ISO under the provisions of Section 422 of the Code. Unless otherwise
determined by the Committee and specified in the Stock Option Agreement,
all Options shall immediately become exercisable upon a Change in Control.
(g) All Options granted hereunder prior to the Initial Public
Offering shall be conditional upon, and for all purposes hereunder, deemed
granted upon, the Initial Public Offering.
(h) The Committee may, at any time, grant new or additional options
to any eligible Employee or Consultant who has previously received Options
under this Plan, or options under other plans, whether such prior Options
or other options are still outstanding, have been exercised previously in
whole or in part, or have been canceled. The exercise price of such new or
additional Options may be established by the Committee, subject to Section
6(b) hereof, without regard to such previously granted Options or other
options.
SECTION 7. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
(a) Non-Employee Directors of the Corporation shall be eligible to
receive Options under the Plan only pursuant to the provisions of this
Section 7. Each individual who agrees to become a Non-Employee Director
after September 1, 1999 shall receive upon his or her first election to the
Board, without the exercise of the discretion of any person, an NQSO under
the Plan relating to the purchase of 20,000 shares of Stock at an exercise
price per share equal to the Fair Market Value of one share of Stock as of
the date of grant (an "Initial Grant"). Non-Employee Directors in office
subsequent to the Initial Public Offering and prior to September 1, 1999,
shall receive, as of the date of the first grant described in the preceding
sentence, without the exercise of the discretion of any person, an NQSO
under the Plan relating to the purchase of 10,000 shares of Stock at an
exercise price equal to the Fair Market Value of one share of Stock at the
date of grant. On the day of each annual meeting of stockholders, each
person who is a continuing Non-Employee Director (excluding any newly-
elected Non-Employee Director entitled to receive an Initial Grant) shall
receive, without the exercise of the discretion of any person, an NQSO
under the Plan relating to the purchase of 5,000 shares of Stock. In the
event that there are not sufficient shares available under this Plan to
allow for the grant to each Non-Employee Director of an NQSO for the number
of shares provided herein, each Non-Employee Director shall receive an NQSO
for his pro rata share of the total number of shares of Stock available
under the Plan.
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(b) The exercise price of each share of Stock subject to an Option
granted to a Non-Employee Director shall equal the Fair Market Value of a
share of Stock on the date such Option is granted.
(c) Each Option granted to a Non-Employee Director shall become
exercisable in three equal installments on the date of grant and on each of
the first two anniversaries of the date of grant, and shall have a term of
five years from the date of grant. Notwithstanding the exercise period of
any Option granted to a Non-Employee Director, all such Options shall
immediately become exercisable upon a Change in Control.
SECTION 8. EXERCISE OF OPTIONS.
(a) A Grantee or other permitted holder shall exercise an Option by
delivery of written notice to the Corporation setting forth the number of
shares with respect to which the Option is to be exercised, together with
cash, certified check, bank draft, wire transfer, or postal or express
money order payable to the order of the Corporation for an amount equal to
the Option price of such shares and any income tax which may be required to
be withheld as determined by the Committee pursuant to Section 12. The
Committee may, in its sole discretion, permit a Grantee to pay all or a
portion of the exercise price by delivery of Stock or other property
(including notes or other contractual obligations of Grantees to make
payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods
by which Stock will be delivered or deemed to be delivered to Grantees.
(b) Except as provided pursuant to section 9(a), no Option granted to
an Employee or Consultant shall be exercised unless at the time of such
exercise the Grantee is then: (i) an employee of the Company or a
Subsidiary (determined with reference to Section 2(w)(i) only); or (ii) a
Consultant (determined with reference to Section 2(e)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i)
only).
(c) Except as provided in Section 9(a), no Option granted to a Non-
Employee Director shall be exercised unless at the time of such exercise
the Grantee is then a Non-Employee Director.
SECTION 9. EXERCISE OF OPTIONS UPON TERMINATION.
(a) Unless otherwise determined by the Committee, upon termination of
a Grantee's employment with the Corporation and its Subsidiaries, such
Grantee may exercise any Options during the three-month period following
such termination of employment, but only to the extent such Option was
exercisable immediately prior to such termination of employment.
Notwithstanding the foregoing, if the Committee
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determines that such termination is for cause, all Options held by the
Grantee shall immediately terminate. In addition, all Options granted on
the basis of clause (ii) of Section 2(e), Section 2(i) or Section 2(w)
shall immediately terminate if the Committee determines, in its sole
discretion, that the Consultant, Employee, or Subsidiary, as the case may
be, will not become a Consultant, Employee or Subsidiary within the meaning
of clause (i) of such Sections.
(b) Unless otherwise determined by the Committee and specified in the
Stock Option Agreement, in no event shall any Option be exercisable for
more than the maximum number of shares that the Grantee was entitled to
purchase at the date of termination of the relationship with the
Corporation and its Subsidiaries.
(c) The sale of any Subsidiary shall be treated as a termination of
employment with respect to any Grantee employed by such Subsidiary.
(d) Subject to the foregoing, in the event of death, Options may be
exercised by a Grantee's legal representative. Options transferred
pursuant to Section 14 may also be exercised by a permitted holder.
SECTION 10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event any
dividend or other distribution (whether in the form of cash, Stock, or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event affects the Stock such that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
Grantees under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of shares of Stock
deemed to be available thereafter for grants of Options under Section 3, (ii)
the number and kind of shares of Stock that may be delivered or deliverable in
respect of outstanding Options, (iii) the number of shares with respect to which
Options may be granted to a given Grantee in the specified period as set forth
in Section 6(d), and (iv) the exercise price or, if deemed appropriate, the
Committee may make provision for a cash payment with respect to any conditions
of, and the criteria included in, Options (including, without limitation, cash
payments in exchange for an Option or substitution of Options using stock of a
successor or other entity) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence)
affecting the Corporation or any Subsidiary or the financial statements of the
Corporation or any Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles.
SECTION 11. RESTRICTIONS ON ISSUING SHARES. The Corporation shall not be
obligated to deliver Stock upon the exercise or settlement of any Options or
take other actions under the Plan until the Corporation shall have determined
that applicable federal and state laws, rules, and regulations have been
complied with and such approvals of any regulatory or governmental agency have
been obtained and contractual obligations to which the Option may be subject
have been satisfied. The Corporation, in its discretion, may postpone the
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issuance or delivery of Stock under any Option until completion of such stock
exchange listing or registration or qualification of such Stock or other
required action under any federal or state law, rule, or regulation as the
Corporation may consider appropriate, and may require any Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock under the Plan.
SECTION 12. TAX WITHHOLDING. To the extent required by applicable federal,
state, local or foreign law, a Grantee shall make arrangements satisfactory to
the Company for the satisfaction of any withholding tax obligations that arise
by reason of an Option exercise or any sale of shares. The Company shall not be
required to issue shares until such obligations are satisfied. The Committee
may permit these obligations to be satisfied by having the Company withhold a
portion of the shares of the stock that otherwise would be issued to him or her
upon the exercise of the Option, or to the extent permitted, by tendering shares
previously acquired. The Committee may also, upon the request of a Grantee
desiring to exercise an Option, direct the Company to lend the Grantee an amount
necessary to pay any federal and state income tax withholding requirements in
connection with such exercise, which loan may be forgiven over a three-year
period subject to continued service with the Company.
SECTION 13. LOANS TO GRANTEES. The Committee may, upon the request of a
Grantee, direct the Company to lend the Grantee an amount necessary to satisfy
the exercise price of any Option. Such loan may be forgiven over a three-year
period subject to continued service with the Company.
SECTION 14. TRANSFERABILITY.
(a) Except as provided below, no Option shall be subject to
anticipation, sale, assignment, pledge, encumbrance, charge or transfer
except by will or the laws of descent and distribution, and an Option shall
be exercisable during the Grantee's lifetime only by the Grantee.
(b) Notwithstanding the foregoing, the Committee may provide, in a
Stock Option Agreement, that the Grantee may transfer NQSOs to family
members or other persons or entities according to such terms as the
Committee may determine; provided that the Grantee receives no
consideration for the transfer of the NQSO and the transferred NQSO shall
continue to be subject to the same terms and conditions as were applicable
to the NQSO immediately before the transfer.
SECTION 15. NON-COMPETITION. If the Grantee breaches any non-competition
agreement in effect with the Corporation or its Subsidiaries, all of the
Grantee's outstanding Options shall immediately terminate, and the Corporation
may require that the Grantee pay to the Corporation or its Subsidiaries (in
Stock or cash) an amount equal to any gain arising from the exercise of Options
during the forfeiture period. The forfeiture period is the period beginning on
the date that is six months before the Grantee's termination of employment or
service with
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the Corporation and its Subsidiaries and ending upon the termination of such
non-competition agreement. The gain to be reimbursed is the amount by which the
Fair Market Value of the Stock on the date of the Committee's determination (or
the date of any earlier sale or other disposition of the Stock covered by the
Option, if greater) exceeds the exercise price of the Option.
SECTION 16. GENERAL PROVISIONS.
(a) Each Option shall be evidenced by a Stock Option Agreement. The
terms and provisions of such Stock Option Agreements may vary among
Grantees and among different Options granted to the same Grantee.
(b) The grant of an Option in any year shall not give the Grantee any
right to similar grants in future years, any right to continue such
Grantee's employment relationship with the Corporation or its Subsidiaries,
or, until such Option is exercised and share certificates are issued, any
rights as a stockholder of the Corporation. All Grantees shall remain
subject to discharge to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of
any Option to any particular assets of the Corporation or its Subsidiaries,
or any shares of Stock allocated or reserved for the purposes of the Plan
or subject to any Option except as set forth herein. The Corporation shall
not be required to establish any fund or make any other segregation of
assets to assure the payment of any Option.
(d) The issuance of shares of Stock to Grantees, their legal
representatives or other permitted holders shall be subject to any
applicable taxes and other laws or regulations of the United States or of
any state having jurisdiction thereof.
SECTION 17. AMENDMENT OR TERMINATION. The Board may, at any time, alter,
amend, suspend, discontinue or terminate this Plan; provided, however, that no
such action shall adversely affect the rights of Grantees to Options previously
granted hereunder and, provided further, however, that any shareholder approval
necessary or desirable in order to comply with Section 162(m) or Section 422 of
the Code (or other applicable law or regulation) shall be obtained in the manner
required therein. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue, or terminate, any Option theretofore granted
and any Stock Option Agreement relating thereto; provided, however, that,
without the consent of an affected Grantee, no such action may materially impair
the rights of such Grantee under such Option. Upon termination of an Option,
the Committee may (i) require that Grantees surrender their outstanding Options
in exchange for a payment by the Corporation, in cash or Stock as determined by
the Committee, in an amount equal to the amount by which the then Fair Market
Value of the shares of Stock subject to the Grantee's unexercised Options
exceeds the exercise price of the Options, or (ii) after giving Grantees an
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opportunity to exercise their outstanding Options, terminate any or all
unexercised at such time as the Committee deems appropriate.
SECTION 18. EFFECTIVE DATE OF PLAN. This Plan is effective upon its initial
adoption by the Board and shall continue in effect until terminated by the
Board. No ISO may be granted more than ten years after the adoption of the Plan
by the Board or approval of the Plan by the stockholders, whichever is earlier.
- - - - - - - - - - - - - -
This Plan was amended and restated on August 31, 2000.
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