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EXHIBIT 10.2
DXP ENTERPRISES, INC.
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
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DXP ENTERPRISES, INC.
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
TABLE OF CONTENTS
SECTION
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ARTICLE I
DEFINITIONS
Board....................................................... 1.1
Change of Control Value..................................... 1.2
Company..................................................... 1.3
Corporate Change............................................ 1.4
Disability.................................................. 1.5
Fair Market Value........................................... 1.6
Non-Employee Director....................................... 1.7
Option...................................................... 1.8
Option Agreement............................................ 1.9
Optionee.................................................... 1.10
Plan........................................................ 1.11
Retire or Retirement........................................ 1.12
Stock....................................................... 1.13
ARTICLE II
GENERAL PROVISIONS RELATING TO OPTIONS
Dedicated Shares............................................ 2.1
Non-Transferability......................................... 2.2
Requirements of Law......................................... 2.3
Recapitalization or Reorganization of the Company........... 2.4
Options Conditioned Upon Shareholder Approval............... 2.5
ARTICLE III
OPTIONS
Automatic Annual Grants..................................... 3.1
Amount Exercisable -- Automatic Annual Grants............... 3.2
Grants for Persons Who are Directors on September 1, 1998... 3.3
Grants for New Directors.................................... 3.4
Amount Exercisable -- Grants for New Directors.............. 3.5
Option Price................................................ 3.6
Duration of Options......................................... 3.7
Death of an Optionee........................................ 3.8
Exercise of Options......................................... 3.9
Form of Options............................................. 3.10
Written Agreement........................................... 3.11
No Rights as Shareholder.................................... 3.12
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
ARTICLE V
MISCELLANEOUS
No Retention Obligation..................................... 5.1
Taxes....................................................... 5.2
Gender...................................................... 5.3
Headings.................................................... 5.4
Other Compensation.......................................... 5.5
Other Options............................................... 5.6
Arbitration of Disputes..................................... 5.7
Governing Law............................................... 5.8
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DXP ENTERPRISES, INC.
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This DXP Enterprises, Inc. 1999 Non-Employee Director Stock Option Plan
(the "Plan") is adopted for the benefit of the directors of DXP Enterprises,
Inc., a Texas corporation (the "Company"), who, at the time of their service,
are not employees of the Company or any of its subsidiaries. The Plan is
intended to advance the interest of the Company by providing such directors with
an additional incentive to serve the Company by increasing their proprietary
interest in the success of the Company.
ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
1.1 "Board" means the board of directors of the Company.
1.2 "Change of Control Value" means the amount determined in clause (i),
(ii) or (iii), whichever is applicable, as follows: (i) the per share price
offered to shareholders of the Company in the merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii) the price per
share offered to shareholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if a Corporate Change
occurs other than pursuant to a tender or exchange offer, the fair market value
per share of the shares into which such Options being surrendered are
exercisable, as determined by the Board as of the date determined by the Board
to be the date of cancellation and surrender of such Options. If the
consideration offered to shareholders of the Company in any transaction
described above consists of anything other than cash, the Board shall determine
the fair cash equivalent of the portion of the consideration offered which is
other than cash.
1.3 "Company" means DXP Enterprises, Inc., a Texas corporation.
1.4 "Committee" means a committee appointed by the Board to administer the
Plan, which Committee shall consist of not less than two members of the Board
and shall be comprised solely of members of the Board who qualify as
non-employee directors as defined in Rule 16b-3(b)(3) of the Securities Exchange
Act of 1934, as amended.
1.5 "Corporate Change" means that any of the following shall have
occurred: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly owned subsidiary of the Company), (ii) the
Company sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity (other than a
wholly owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires
or gains ownership or control of more than 50 percent of the shares of the
Stock, or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company before such election
shall cease to constitute a majority of the Board.
1.6 "Disability" means a mental or physical disability of the Optionee
which, in the opinion of a physician selected by the Committee, (i) shall
prevent the Optionee from adequately performing his services as a director of
the Company and (ii) can be expected to result in death or has lasted or can be
expected to last for a continuous period of not less than 12 months.
1.7 "Fair Market Value" of the Stock as of any date means the closing sale
price of the Stock on that date (or, if there was no sale on such date, the next
preceding date on which there was such a sale) on the Nasdaq National Market or
the principal securities exchange on which the Stock is listed.
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1.8 "Non-Employee Director" means a director of the Company who, while a
director, is not an employee of the Company, or a corporation, of which a
majority of voting securities is owned, directly or indirectly, by the Company.
1.9 "Option" means an option granted under this Plan to purchase shares of
Stock.
1.10 "Option Agreement" means the written agreement which sets out the
terms of an Option.
1.11 "Optionee" means a person who is granted an Option under this Plan.
1.12 "Plan" means the DXP Enterprises, Inc. 1999 Non-Employee Director
Stock Option Plan, as set out in this document and as it may be amended from
time to time.
1.13 "Retire" or "Retirement" means the cessation of an Optionee's
services as a director on the Board after completing either six full terms or
six years of service as a director on the Board.
1.14 "Stock" means the common stock of the Company, $.01 par value.
ARTICLE II
GENERAL PROVISIONS RELATING TO OPTIONS
2.1 Dedicated Shares. The total number of shares of Stock with respect to
which Options may be granted under the Plan shall be 200,000 shares. The shares
may be treasury shares or authorized but unissued shares. The number of shares
stated in this Section 2.1 shall be subject to adjustment in accordance with the
provisions of Section 2.4.
If any outstanding Option expires or terminates for any reason or any
Option is surrendered, the shares of Stock allocable to the unexercised portion
of that Option may again be subject to an Option under the Plan.
2.2 Non-Transferability. Except as expressly provided otherwise in an
Optionee's Option Agreement, Options shall not be transferable by the Optionee
otherwise than by will or under the laws of descent and distribution, and shall
be exercisable, during the Optionee's lifetime, only by him.
2.3 Requirements of Law. The Company shall not be required to sell or
issue any Stock under any Option if issuing that Stock would constitute or
result in a violation by the Optionee or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option, the Company shall not
be required to issue any Stock unless the Committee has received evidence
satisfactory to it to the effect that the holder of that Option will not
transfer the Stock except in accordance with applicable law, including receipt
of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive. The Company
may, but shall in no event be obligated to, register any Stock covered by this
Plan pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of an Option is not
registered, the Company may imprint on the certificate evidencing the Stock any
legend that counsel for the Company considers necessary or advisable to comply
with applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option and the issuance
of shares thereunder, to comply with any law or regulation of any governmental
authority.
2.4 Recapitalization or Reorganization of the Company.
(a) No Limitations on Company's Rights to Effect Changes. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or its rights, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
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(b) Increase or Reduction of Outstanding Shares. If a stock split, reverse
stock split, stock dividend, combination, recapitalization or reclassification
of the Stock, or any other increase or decrease in the number of shares of the
Stock outstanding, is effected without receipt of consideration by the Company,
then (i) the number, class, and per share price of shares of Stock subject to
outstanding Options under the Plan shall be appropriately adjusted in such a
manner as to entitle an Employee to receive upon exercise of an Option, for the
same aggregate cash consideration, the equivalent total number and class of
shares he would have received had he exercised his Option in full immediately
prior to the event requiring the adjustment and (ii) the number and class of
shares of Stock then reserved to be issued under the Plan shall be adjusted by
substituting for the total number and class of shares of Stock then reserved,
that number and class of shares of Stock that would have been received by the
owner of an equal number of outstanding shares of each class of Stock as the
result of the event requiring the adjustment. The conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration by the Company". Such adjustment shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Stock subject to an Option.
(c) Sale or Merger of the Company Where the Company is Not the Survivor;
Dissolution or Liquidation of the Company. In the event of a Corporate Change,
no later than (i) ten days after the approval by the shareholders of the Company
of the Corporate Change or (ii) thirty days after the occurrence of a Corporate
Change for which no approval by the shareholders of the Company is required, the
Committee, acting in its sole discretion without the consent or approval of any
Optionee, shall act to effect one or more of the following alternatives, which
may vary among individual Optionees and which may vary among Options held by any
individual Optionee: (i) accelerate the time at which Options then outstanding
may be exercised so that such Options may be exercised in full for a limited
period of time on or before a specified date (before or after the Corporate
Change) fixed by the Committee, after which specified date all unexercised
Options and all rights of Optionees thereunder shall terminate, (ii) require the
mandatory surrender to the Company by selected Optionees of some or all of the
outstanding Options held by such Optionees (irrespective of whether such Options
are then exercisable under the provisions of the Plan) as of a date, before or
after such Corporate Change, specified by the Committee, in which event the
Committee shall thereupon cancel such Options and the Company shall pay to each
Optionee an amount of cash per share equal to the excess, if any, of the Change
of Control Value of the shares subject to such Options over the exercise
price(s) under such Options for such shares, (iii) make any adjustments to
Options then outstanding as the Committee deems appropriate, or (iv) provide
that the number and class of shares of Stock covered by an Option theretofore
granted shall be adjusted so that such Option shall thereafter cover the number
and class of shares of stock or other securities or property (including, without
limitation, cash) to which the Optionee would have been entitled pursuant to the
terms of the agreement of merger, consolidation or sale of assets and
dissolution if, immediately prior to such merger, consolidation or sale of
assets and dissolution, the Optionee had been the holder of record of the number
of shares of Stock then covered by such Option.
(d) Merger of the Company Where the Company is the Survivor. After a merger
of one or more corporations into the Company or after a consolidation of the
Company and one or more corporations in which the Company shall be the surviving
corporation, each Optionee shall be entitled to have his Option appropriately
adjusted based on the manner in which the Stock was adjusted under the terms of
the agreement of merger or consolidation.
2.5 Options Conditioned Upon Shareholder Approval. No Option granted under
the Plan will be exercisable before the shareholders of the Company approve the
Plan.
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ARTICLE III
OPTIONS
3.1 Automatic Annual Grants. Subject to the availability under the Plan of
a sufficient number of shares of Stock that may be issued upon the exercise of
outstanding Options, each Non-Employee Director who is a director of the Company
on any July 1 while this Plan is in effect shall be granted on each such July 1
an Option to purchase 1,000 shares of Stock.
3.2 Amount Exercisable -- Automatic Annual Grants. Subject to Section 2.5,
each Option granted pursuant to Section 3.1 is exercisable in full immediately
upon the date of grant.
3.3 Grants For Persons Who are Directors on September 1, 1998. There shall
be granted under the Plan to each Non-Employee Director who is serving as a
director of the Company on September 1, 1998, an Option to purchase 1,000 shares
of Stock. Nothing in this Section 3.3 shall affect the eligibility of an
Optionee to receive an Option pursuant to Section 3.1.
3.4 Grants for New Directors. Subject to the availability under the Plan
of a sufficient number of shares of Stock that may be issued upon the exercise
of outstanding options, each person who shall become a Non-Employee Director
after June 8, 1999 shall be granted, on the date of his election, whether by the
shareholders of the Company or the Board in accordance with applicable law, an
Option under the Plan to purchase 5,000 shares of Stock. Notwithstanding the
foregoing, no Non-Employee Director who has received an Option pursuant to
Section 3.3 shall be eligible to receive an Option pursuant to this Section 3.4.
Upon the receipt of an Option under the Plan pursuant to this Section 3.4, the
Optionee shall not be eligible to receive another Option for new Non-Employee
Directors pursuant to this Section 3.4. Nothing in this Section 3.4 shall affect
the eligibility of an Optionee to receive an Option pursuant to Section 3.1.
3.5 Amount Exercisable -- Grants for New Directors. Each Option Agreement
for an Option granted pursuant to Section 3.3 or Section 3.4 shall contain the
following terms of exercise:
(a) No Option granted under Section 3.3 or Section 3.4 of the Plan may
be exercised until the Optionee has served as a director of the Company for
one year following the date of grant;
(b) beginning on the day after the first anniversary of the date of
grant, the Option may be exercised up to 1/3 of the shares subject to the
Option;
(c) after the expiration of each succeeding anniversary date of the
date of grant, the Option may be exercised up to an additional 1/3 of the
shares subject to the Option, so that after the expiration of the third
anniversary of the date of grant, the Option shall be exercisable in full;
and
(d) to the extent not exercised, installments shall be cumulative and
may be exercised in whole or in part until the Option expires on the tenth
anniversary of the date of the grant.
3.6 Option Price. The price at which Stock may be purchased under an
Option shall be equal to 100 percent of the Fair Market Value of the shares of
Stock on the date the Option is granted.
3.7 Duration of Options.
Each Option awarded, to the extent it shall not previously have been
exercised, shall terminate on the earlier of the following dates:
(i) on the last day within the three-year period commencing on the
date on which the Optionee ceases to be a director of the Company, for
any reason other than death, Retirement or Disability; or
(ii) ten years after the date of grant of such Option.
If the Optionee ceases to be a director of the Company for any reason other
than his death, Disability or Retirement, his Option shall not continue to vest
after such cessation of service as a director. If the Optionee ceases to be a
director of the Company due to his death, Disability or Retirement, his Option
shall continue to vest after such cessation of service as a director until the
Option expires ten years after the grant of the Option.
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3.8 Death of an Optionee. Upon the death of an Optionee prior to the
expiration of his Option, his executors, administrators or any person or persons
to whom his Option may be transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to the expiration date of
the Option to exercise the Option with respect to the number of shares that the
Optionee would have been entitled to exercise if he were still alive.
3.9 Exercise of Options. An Optionee may exercise his Option by delivering
to the Company a written notice stating (i) that he wishes to exercise such
Option on the date such notice is so delivered, (ii) the number of shares of
Stock with respect to which such Option is to be exercised and (iii) the address
to which the certificate representing such shares of Stock should be mailed. In
order to be effective, such written notice shall be accompanied by payment of
the option price of such shares of Stock. Each such payment shall be made by
cashier's check drawn on a national banking association and payable to the order
of the Company in United States dollars.
If, at the time of receipt by the Company of such written notice, (i) the
Company has unrestricted surplus in an amount not less than the option price of
such shares of Stock, (ii) all accrued cumulative preferential dividends and
other current preferential dividends on all outstanding shares of preferred
Stock of the Company have been fully paid, (iii) the acquisition by the Company
of its own shares of Stock for the purpose of enabling such Optionee to exercise
such Option is otherwise permitted by applicable law and without any vote or
consent of any shareholder of the Company, and (iv) there shall have been
adopted, and there shall be in full force and effect, a resolution of the Board
of Directors of the Company authorizing the acquisition by the Company of its
own shares of Stock for such purpose, then such Optionee may deliver to the
Company, in payment of the option price of the shares of Stock with respect to
which such Option is exercised, (x) certificates registered in the name of such
Optionee that represent a number of shares of Stock legally and beneficially
owned by such Optionee (free of all liens, claims and encumbrances of every
kind) and having a Fair Market Value on the date of receipt by the Company of
such written notice that is not greater than the option price of the shares of
Stock with respect to which such Option is to be exercised, such certificates to
be accompanied by Stock powers duly endorsed in blank by the record holder of
the shares of Stock represented by such certificates, with the signature of such
record holder guaranteed by a national banking association, and (y) if the
option price of the shares of Stock with respect to which such Option is to be
exercised exceeds such Fair Market Value, a cashier's check drawn on a national
banking association and payable to the order of the Company in an amount, in
United States dollars, equal to the amount of such excess. Notwithstanding the
provisions of the immediately preceding sentence, the Treasurer of the Company,
in his sole discretion, may refuse to accept shares of Stock in payment of the
option price of the shares of Stock with respect to which such Option is to be
exercised and, in that event, any certificates representing shares of Stock that
were received by the Company with such written notice shall be returned to such
Optionee, together with notice by the Company to such Optionee of the refusal of
the Treasurer of the Company to accept such shares of Stock. If, at the
expiration of seven business days after the delivery to such Optionee of such
written notice from the Company, such Optionee shall not have delivered to the
Company a cashier's check drawn on a national banking association and payable to
the order of the Company in an amount, in United States dollars, equal to the
option price of the shares of Stock with respect to which such Option is to be
exercised, such written notice from the Optionee to the Company shall be
ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of (i) such
written notice from the Optionee and (ii) payment, in the form required by the
foregoing provisions of this Section 3.9, of the option price of the shares of
Stock with respect to which such Option is to be exercised, a certificate
representing the number of shares of Stock with respect to which such Option has
been so exercised, such certificate to be registered in the name of such
Optionee, provided that such delivery shall be considered to have been made when
such certificate shall have been mailed, postage prepaid, to such Optionee at
the address specified for such purpose in such written notice from the Optionee
to the Company.
3.10 Form of Options. All Options granted under this Plan will be
nonqualified stock options that are not intended to qualify as incentive stock
options under section 422 of the Internal Revenue Code of 1986, as amended.
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3.11 Written Agreement. Each Option shall be embodied in a written Option
Agreement which shall be subject to the terms and conditions of this Plan and
shall be signed by the Optionee and by an officer of the Company.
3.12 No Rights as Shareholder. No Optionee shall have any rights as a
shareholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
ARTICLE IV
AMENDMENT OR TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time, in its sole and
absolute discretion; provided, however, that no amendment shall decrease the
exercise price for Options below the Fair Market Value of the Stock at the time
it is granted.
ARTICLE V
MISCELLANEOUS
5.1 No Retention Obligation. The granting of any Option shall not impose
upon the Company any obligation to continue to retain the Optionee's services as
a director of the Company.
5.2 Taxes. The Company shall not be obligated to advise an Optionee of the
existence of any tax that may apply with respect to the grant or exercise of an
Option.
5.3 Gender. If the context requires, words of one gender when used in this
Plan shall include the other and words used in the singular or plural shall
include the other.
5.4 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of this Plan and shall
not be used in construing the terms of this Plan.
5.5 Other Compensation. The adoption of this Plan shall not affect any
other compensation in effect for the Non-Employee Directors, nor shall this Plan
preclude the Company from establishing any other forms of compensation for
Non-Employee Directors.
5.6 Other Options. The grant of an Option shall not confer upon an
Optionee the right to receive any future or other Options under this Plan.
5.7 Arbitration of Disputes. Any controversy arising out of or relating to
the Plan or an Option Agreement shall be resolved by arbitration conducted
pursuant to the arbitration rules of the American Arbitration Association. The
arbitration shall be final and binding on the parties.
5.8 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
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