1
EXHIBIT 10.1
NICHOLS TXEN CORPORATION
1998 STOCK OPTION PLAN
1. PURPOSE
The 1998 Stock Option Plan ("Plan") of Nichols TXEN Corporation
("Corporation") is intended as an incentive for key employees which will foster
increased productivity, encourage them to remain in the employ of the
Corporation, and enable them to acquire or increase their proprietary interest
in the Corporation. At the discretion of the Committee, as defined below,
options issued pursuant to this Plan may be either incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended ("Incentive Options"), or options which are not Incentive Options
("Non-Statutory Options").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
composed of either the entire Board of Directors or a committee of the Board of
Directors that is composed solely of two or more Non-Employee Directors. For
this purpose, the term "Non-Employee Director" shall mean a person who is a
member of the Company's Board of Directors who (a) is not currently an officer
or employee of the Company or any parent or subsidiary of the Company, (b) does
not directly or indirectly receive compensation for serving as a consultant or
in any other non-director capacity from the Company or any parent or subsidiary
of the Company that exceeds the dollar amount for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K promulgated under the
Securities Act of 1933 and the Securities Exchange Act of 1934 ("Regulation
S-K"), (c) does not possess an interest in any other transaction with the
Company or any parent or subsidiary of the Company for which disclosure would
be required pursuant to Item 404(a) of Regulation S-K, and (d) is not engaged
in a business relationship with the Company or any parent or subsidiary of the
Company which would be disclosable under Item 404(b) of Regulation S-K. In the
event the Committee is a committee composed of two or more Non-Employee
Directors, the Board of Directors may from time to time remove members from,
add members to, and fill vacancies, on the Committee. The Committee shall
select one of its members as Chairman, and shall hold meetings at such times
and places as it may determine. Action taken by a majority of the Committee at
which a quorum is present, or action reduced to writing or approved in writing
by a majority of the members of the Committee, shall be valid acts of the
Committee.
The Committee may, from time to time and at its discretion, grant
options to eligible employees. Subject to the terms of this Plan, the Committee
shall exercise its sole discretion in determining which eligible employees
shall receive options, and the number of shares subject to each option granted.
A member of the Committee shall be eligible to participate in the Plan and
receive options under the Plan.
The Committee's interpretation and construction of any provision of
the Plan, or any option granted under it, shall be final. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under the Plan.
-1-
2
3. ELIGIBILITY
Persons eligible to receive options shall be such key employees
(including officers) of the Corporation or any company which is a parent
corporation or a subsidiary corporation of the Corporation and its subsidiaries
as the Committee shall from time to time select. The determination of whether a
company is a subsidiary or parent of the Corporation shall be made in
accordance with Section 425 of the Internal Revenue Code of 1986, as amended.
No person shall be eligible to receive an option for a larger number of shares
than is recommended for him by the Committee. In selecting the individuals to
whom options shall be granted, as well as determining the number of shares
subject to each option, the Committee shall weigh the position and the
responsibility of the individual being considered, the nature of his or her
services, his or her present and potential contributions to the Corporation,
and such other factors as the Committee deems relevant to accomplish the
purposes of the Plan. No Incentive Option shall be granted to an employee who,
immediately after such Incentive Option is granted, owns or has rights to stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation, unless such Incentive Option is
granted at a price which is at least 110% of the fair market value of the stock
subject to the Incentive Option and such Incentive Option by its terms is not
exercisable after the expiration of five (5) years from the date such Incentive
Option is granted.
4. STOCK
The stock subject to options issued under the Plan shall be shares of
the Corporation's authorized but unissued, or reacquired, one cent ($.01) par
value per share common stock (hereafter sometimes called "Capital Stock" or
"Common Stock"). The aggregate number of shares which may be issued pursuant to
option exercises shall not exceed 1,700,000 shares of Capital Stock. In no
event may any employee receive options to purchase more than 100,000 shares of
Common Stock of the Company during any fiscal year of the Corporation. The
limitations established by each of the preceding sentences shall be subject to
adjustment as provided in Article 5(g) of the Plan.
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the shares of Capital Stock allocable to the
unexercised portion of such option may again be subjected to an option under
the Plan.
5. TERMS AND CONDITIONS OF OPTIONS
Stock options granted under the Plan shall be authorized by the
Committee and shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Such agreements shall conform with, and be
subject to, the following terms and conditions:
(A) NUMBER OF SHARES AND FORM OF OPTION
Each option agreement shall state the number of shares to which it
pertains and whether the option granted is an Incentive Option or a
Non-Statutory Option.
-2-
3
(B) EXERCISE PRICE
Each option agreement shall state the exercise price. The per share
exercise price for shares obtainable pursuant to an Incentive Option shall not
be less than 100% of the Fair Market Value, as defined below, of the shares of
Capital Stock of the Corporation on the date the option is granted. The per
share exercise price for shares obtainable pursuant to a Non-Statutory Option
shall not be less than the Fair Market Value of the shares of Capital Stock of
the Corporation on the date the option is granted, except that with respect to
not more than 10% of the shares of the Capital Stock authorized under this
Plan, the Committee composed solely of Non-Employee Directors may establish an
exercise price below Fair Market Value. Subject to the foregoing, the Committee
shall have full authority and discretion, and shall be fully protected, with
respect to the price fixed for shares obtainable pursuant to the exercise of
options.
The aggregate Fair Market Value (determined at the time the Incentive
Option is granted) of the Common Stock with respect to which Incentive Options
are exercisable for the first time by the option recipient during any calendar
year (under all such plans of the Corporation and its subsidiary corporations)
shall not exceed $100,000. If an option recipient is granted an Incentive
Option which exceeds this limitation, the Incentive Option shall be treated as
Non-Statutory Options to the extent such limitation is exceeded.
For all purposes under the Plan, Fair Market Value shall be deemed to
be the closing sale price of the Common Stock as reported on the Nasdaq
National Market (or the mean between the highest and lowest per share sales
price should the Common Stock be listed on an exchange) on a given day, or if
such stock is not traded on that day, then on the next preceding day on which
such stock was traded ("Fair Market Value"). Notwithstanding the foregoing, as
to options granted on the Effective Date (as hereinafter defined), "Fair Market
Value" shall mean the price at which the Common Stock is initially offered for
sale to the public as shown on the cover of the prospectus included in the
registration statement which is declared effective by the Securities and
Exchange Commission.
(C) MEDIUM AND TIME OF PAYMENT
The option recipient may pay the exercise price in cash, by means of
unrestricted shares of the Corporation's Common Stock, or in any combination
thereof. Notwithstanding the foregoing, shares of the Corporation's Common
Stock may be used to exercise an option only if the number of shares for which
the option is then being exercised is at least five hundred (500) shares. The
option recipient must pay for shares received pursuant to an option exercise on
or before the date of such exercise. Payment in currency or by check, bank
draft, cashier's check, or postal money order shall be considered payment in
cash. In the event of payment in the Corporation's Common Stock, the shares
used in payment of the exercise price shall be taken at the Fair Market Value
of such shares on the date they are tendered to the Corporation. The shares
purchased upon exercise of an option with shares of the Corporation's Common
Stock owned by the option recipient may not be sold, exchanged, pledged or
otherwise transferred during the one (1) year period following such purchase
and shall bear the following restrictive legend:
The shares represented by this certificate were acquired with
shares of Nichols TXEN Corporation common stock and,
therefore, pursuant to the terms of Article 5(c) of the
Nichols TXEN Corporation 1998 Stock
-3-
4
Option Plan, may not be sold, exchanged, pledged or otherwise
transferred during the one (1) year period commencing on the
date shown on the face of this certificate.
(D) TERM AND EXERCISE OF OPTIONS
No Non-Statutory Option shall be exercisable either in whole or in
part prior to the earlier of (a) the date specified in the Non-Statutory
Option, or (b) six (6) months from the date the Non-Statutory Option is
granted. During the option recipient's lifetime, the Non-Statutory Option shall
be exercisable only by the option recipient or the option recipient's guardian
or legal representative if one has been appointed, and shall not be assignable
or transferable other than by will or the laws of descent and distribution. No
Non-Statutory Option shall be exercisable after the earlier of (1) the date
specified in the Non-Statutory Option, or (2) the expiration of ten (10) years
from the date the Non-Statutory Option is granted.
No Incentive Option shall be exercisable either in whole or in part
prior to twenty-four (24) months from the date it is granted. Subject to the
right of accretion provided in the next to last sentence of this Article 5 (d),
each Incentive Option shall be exercisable in three (3) installments as
follows: (1) up to one-third of the total shares covered by the Incentive
Option may be purchased after twenty-four (24) months from the date the
Incentive Option is granted; (2) up to one-third of the total shares covered by
the Incentive Option may be purchased after thirty-six (36) months from the
date the Incentive Option is granted; and (3) up to one-third of the total
shares covered by the Incentive Option may be purchased after forty-eight (48)
months from the date the Incentive Option is granted. The Committee may
provide, however, for the exercise of an Incentive Option after the initial
twenty-four month period, either as an increased percentage of shares per year
or as to all remaining shares, if the option recipient dies, is or becomes
disabled, or, with the permission of the Committee, retires. During the option
recipient's lifetime, the Incentive Option shall be exercisable only by the
option recipient, or the option recipient's guardian or legal representative if
one has been appointed, and shall not be assignable or transferable other than
by will or the laws of descent and distribution. To the extent not exercised,
Incentive Option installments shall accumulate and be exercisable, in whole or
in part, in any subsequent period but not later than five (5) years from the
date the Incentive Option is granted. No Incentive Option shall be exercisable
after the expiration of five (5) years from the date it is granted.
(E) TERMINATION OF EMPLOYMENT EXCEPT DEATH
If an option recipient's employment with the Corporation or its
subsidiaries ceases for any reason other than the option recipient's death,
disability or retirement with the consent of the Committee, all options held by
him pursuant to the Plan and not previously exercised as of the date of such
termination shall terminate immediately and become void and of no effect;
provided, however, that the Committee shall have the right to extend the
exercise period by up to three (3) months from the date the option recipient's
employment is terminated. If termination occurs because of disability or as a
result of the option recipient's retirement with the consent of the Committee,
such disabled or retiring option recipient shall have the right to exercise any
options which were exercisable but unexercised as of the date of such
termination at any time within three (3) months after such termination, subject
to the condition that no Non-Statutory Option shall be exercisable after the
date specified in the Non-Statutory Option and no
-4-
5
Incentive Option shall be exercisable after the expiration of five (5) years
from the date it is granted. The term "disability" shall mean a mental or
physical condition resulting from an injury or illness (other than substantial
dependence on or addiction to alcohol or any drug) which renders an option
recipient incapable of performing his normal duties as an employee of the
Corporation or its subsidiaries. The option recipient shall not be considered
to be disabled until the Committee shall have been furnished the opinion of two
licensed physicians that the option recipient is prevented from performing his
duties and that his condition is likely to continue for a period in excess of
twelve (12) months or for an indefinite period. Whether termination of
employment is due to disability or is to be considered a retirement with the
consent of the Committee shall be determined by the Committee in its sole and
absolute discretion, and such determination shall be final and conclusive.
Authorized leaves of absence or absence for military service shall not
constitute termination of employment for the purposes of the Plan.
(F) DEATH OF OPTION RECIPIENT AND TRANSFER OF OPTION
If an option recipient dies while employed by the Corporation or its
subsidiaries or within three (3) months after being terminated due to
disability or retirement with the consent of the Committee, and has not fully
exercised all of his exercisable options, such options may be exercised, at any
time within three (3) months after such termination, by the option recipient's
executors or administrators, or by any person or persons who shall have
acquired the option directly from the option recipient by bequest or
inheritance. In no event, however, shall a Non-Statutory Option be exercisable
after the date specified in the Non-Statutory Option and no Incentive Option
shall be exercisable more than five (5) years after the date such Incentive
Option is granted. In the event an option is transferred to an option
recipient's estate, or to a person to whom such right devolves by reason of the
option recipient's death, then the option shall be nontransferable by the
option recipient's executor or administrator or by such person, except that the
option may be distributed by the option recipient's executors or administrators
to the distributees of the option recipient's estate entitled thereto.
(G) RECAPITALIZATION
Subject to any required action by the shareholders, the aggregate
number of shares which may be issued pursuant to option exercises, the number
of shares of Capital Stock covered by each outstanding option, and the exercise
price per share applicable to shares under such option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Capital Stock of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Capital Stock), or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Corporation.
If the Corporation is merged with or consolidated into any other
corporation, or if all or substantially all of the business or property of the
Corporation is sold, or if the Corporation is liquidated or dissolved, or if a
tender or exchange offer is made for all or any part of the Corporation's
voting securities, or if any other actual or threatened change in control of
the Corporation occurs, the Committee, with or without the consent of the
option recipient, may (but shall not be obligated to), either at the time of or
in anticipation of any such transaction, take any of the following actions that
the Committee may deem appropriate in its sole and absolute discretion: (1)
cancel any option by providing for the payment to the option recipient of the
excess of the Fair Market Value of the shares subject to the option over the
-5-
6
exercise price of the option, (2) substitute a new option of substantially
equivalent value for any option, (3) accelerate the exercise term of any
option, or (4) make such other adjustments in the terms and conditions of any
option as it deems appropriate.
In the event of a change in Capital Stock of the Corporation as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any change shall be deemed to
be the Capital Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, provided that each
Incentive Option granted pursuant to this Plan shall not be adjusted in a
manner that causes the Incentive Option to fail to continue to qualify as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
Except as otherwise expressly provided in this Article 5(g), the
option recipient shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, or by reason of any dissolution, liquidation, merger or
consolidation or spin-off of assets or stock of another corporation. Any issue
by the Corporation of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Capital Stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge, consolidate, dissolve, liquidate, sell, or transfer all
or any part of its business or assets.
(H) RIGHTS AS A STOCKHOLDER
An option recipient or a transferee of an option shall have no rights
as a stockholder with respect to any shares subject to his option until a stock
certificate is issued to him for such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities, or other
property), distributions, or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in Article 5 (g)
of the Plan.
(I) MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS
Subject to the terms of the Plan, the Committee may modify, extend or
renew outstanding options granted under the Plan. The Committee shall not,
however, reprice any outstanding options so as to specify a lower price or
accept the surrender of outstanding options and authorize the granting of new
options in substitution therefore specifying a lower price (a "Repricing"),
except that with respect to not more than 10% of the shares of Capital Stock
authorized under this Plan, the Committee composed solely of Non-Employee
Directors may approve a Repricing of outstanding Non-Statutory Options.
Notwithstanding the foregoing, however, no modification of an option shall,
without the consent of the
-6-
7
option recipient, alter or impair any rights or obligations under any option
theretofore granted under the Plan.
(J) WITHHOLDING
Whenever the Corporation proposes or is required to issue or transfer
shares of Capital Stock under the Plan, the Corporation shall have the right to
require the option recipient, prior to the issuance or delivery of any
certificates for such shares, to remit to the Corporation, or provide
indemnification satisfactory to the Corporation for, an amount sufficient to
satisfy any federal, state, local, and foreign withholding tax requirements
incurred as a result of an option exercise under the Plan by such option
recipient.
(K) OTHER PROVISIONS
The option agreements authorized under the Plan shall contain such
other provisions, including, without limitation, restrictions upon the exercise
of the option, as the Committee shall deem advisable. Limitations and
restrictions shall be placed upon the exercise of Incentive Options, in the
Incentive Option agreement, so that such option will be an "incentive stock
option" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended. The Committee composed solely of Non-Employee Directors is authorized
to grant options containing terms and provisions qualifying such options as
performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
6. TERM OF PLAN
Incentive Options and Non-Statutory Options may be granted from the
Effective Date through September 30, 2008.
7. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have
as directors or as members of the Committee, the members of the Committee shall
be indemnified by the Corporation against the reasonable expenses, including
attorney's fees, actually and necessarily incurred in connection with the
defense of any action, suit, or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Corporation) or paid by them in satisfaction of a judgment in any such
action, suit, or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit, or proceeding that such Committee member is
liable for negligence or misconduct in the performance of his duties; provided,
that within sixty (60) days after institution of any such action, suit, or
proceeding a Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
-7-
8
8. AMENDMENT OF THE PLAN
The Board of Directors, insofar as permitted by law, shall have the
right from time to time with respect to any shares at the time not subject to
options, to suspend or discontinue the Plan or revise or amend it in any
respect whatsoever, except that without approval of the shareholders of the
Corporation, no such revision or amendment shall: (a) change the number of
shares for which options may be granted under the Plan either in the aggregate
or to any individual employee, (b) change the provisions relating to the
determination of employees to whom options shall be granted, (c) remove the
administration of the Plan from the Committee, or (d) decrease the price at
which Incentive Options may be granted.
9. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of Capital
Stock pursuant to the exercise of options will be used for general corporate
purposes.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the option
recipient to exercise such option.
11. NO OBLIGATION TO EMPLOY OPTIONEE
No obligation to retain an option recipient as an employee of the
Corporation or its subsidiaries, or to provide or continue providing the option
recipient with, or to permit the option recipient to retain, any incident
associated with or arising out of employment with the Corporation or its
subsidiaries, including but not limited to tenure, salary, benefits, title, or
position, shall be imposed on the Corporation or its subsidiaries by virtue of
the adoption of the Plan, the grant or acceptance of an option granted pursuant
to the Plan, or the exercise of an option under the Plan.
12. APPROVAL OF STOCKHOLDERS
This Plan shall take effect on the date a registration statement
initially registering the Common Stock under the Securities Act of 1933 is
declared effective by the Securities and Exchange Commission (the "Effective
Date"), subject to approval by the affirmative vote of the holders of a
majority of the outstanding shares of Capital Stock of the Corporation present,
or represented, and entitled to vote at a meeting of the shareholders, which
approval must occur within the period beginning twelve (12) months before and
ending twelve (12) months after the date the Plan is adopted by the Board of
Directors.
-8-