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EXHIBIT 10.3
NICHOLS TXEN CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of the Nichols TXEN Corporation Non-Employee Director Stock
Option Plan (the "Plan") is to secure for Nichols TXEN Corporation (the
"Company") and its shareholders the benefits of the long-term
incentives inherent in increased common stock ownership by the members
of the Board of Directors (the "Board") of the Company who are not
employees of the Company or its Affiliates, by strengthening the
identification of Non-Employee Directors with the interests of all
Nichols TXEN Corporation shareholders.
2. DEFINITIONS
The terms defined in this Section 2 shall have the following meanings,
unless the context otherwise requires.
a. "Affiliate" shall mean any corporation, partnership, joint
venture or other entity in which the Company holds an equity,
profit or voting interest of more than fifty percent (50%).
b. "Annual Meeting of Shareholders" shall mean the annual meeting
of shareholders of the Company held each year.
c. "Code" shall mean the Internal Revenue Code of 1986, as
amended to date and as it may be amended from time to time.
d. "Company" shall mean Nichols TXEN Corporation, a Delaware
corporation.
e. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended to date and as it may be amended from time
to time.
f. "Fair Market Value" per share shall mean as of any day
(1) The fair market value of a share of the Company's
common stock is the closing price reported by the
Nasdaq Stock Market on the business day immediately
preceding the date as of which fair market value is
being determined or, if there were no sales of shares
of the Company's common stock reported on such day,
on the most recently preceding day on which there
were sales, or
(2) if the shares of the Company's stock are not listed
on the Nasdaq Stock Market on the day as of which the
determination is made, the amount determined by the
Board or its delegate to be the fair market value of
a share on such day.
Notwithstanding the foregoing, the fair market value
per share of the shares subject to the option grants on the
Effective Date shall be the price at which the common
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stock is initially offered for sale to the public and as shown
on the cover of the prospectus included in the registration
statement which is declared effective by the Securities and
Exchange Commission.
g. "Non-Employee Director" shall mean a member of the Board of
Directors of the Company who is not also an officer or other
employee of the Company or an Affiliate.
h. "Nonstatutory Stock Option" ("NSO") shall mean a stock option,
which does not qualify for special tax treatment under
Sections 421 or 422 of the Internal Revenue Code.
i. "Option" shall mean either a First Option or an Annual Option
granted pursuant to the provisions of Section 4 of this Plan.
j. "Participant" shall mean any person who holds an Option
granted under this Plan.
k. "Plan" shall mean this Nichols TXEN Corporation Non-Employee
Director Stock Option Plan.
3. ADMINISTRATION
a. The Plan shall be administered by the Board. The Board may, by
resolution, delegate part or all of its administrative powers
with respect to the Plan.
b. The Board shall have all of the powers vested in it by the
terms of the Plan, such powers to include the authority,
within the limits prescribed herein, to establish the form of
the agreement embodying grants of Options made under the Plan.
c. The Board shall, subject to the provisions of the Plan, have
the power to construe the Plan, to determine all questions
arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem
desirable, such administrative decisions of the Board to be
final and conclusive.
d. The Board shall have no discretion to select the Non-Employee
Directors to receive Option grants under the Plan, to
determine the number of shares of the Company's common stock
subject to the Plan or to each grant, nor the exercise price
of the Options granted pursuant to the Plan.
e. The Board may authorize any one or more of their number or the
Secretary or any other officer of the Company to execute and
deliver documents on behalf of the Board. The Board hereby
authorizes the Secretary to execute and deliver all documents
to be delivered by the Board pursuant to the Plan.
f. The expenses of the Plan shall be borne by the Company.
4. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS
a. As of the Effective Date, each current Non-Employee Director
shall be granted an option to purchase five thousand (5,000)
shares of the Company's common stock under the Plan (the
"Initial Option Grants"). Thereafter, as of the day upon which
shareholders vote to elect directors at each annual meeting of
the Company, each Non-Employee Director of
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the Board shall be granted an additional option to purchase
one thousand (1,000) shares of the Company's common stock
under the Plan (the "Annual Option"); provided, however, that
a Non-Employee Director who has not previously been elected as
a member of the Board of Directors of the Company shall be
granted an option to purchase One thousand (1,000) shares of
the Company's common stock under the Plan, on the first
business day of the Non-Employee Director's election to the
Board, including election by the Board of Directors to fill a
vacancy on the Board (the "First Option Grants").
b. The automatic grants to Non-Employee Directors shall not be
subject to the discretion of any person.
c. Each Option granted under the Plan shall be evidenced by a
written Agreement. Each Agreement shall be subject to, and
incorporate, by reference or otherwise, the applicable terms
of this Plan.
d. During the lifetime of a Participant, each Option shall be
exercisable only by the Participant. No Option granted under
the Plan shall be assignable or transferable by the
Participant, except by will or by the laws of descent and
distribution.
5. SHARES OF STOCK SUBJECT TO THE PLAN
a. Subject to adjustment as provided in Section 10 of the Plan,
an aggregate of fifty thousand (50,000) shares of the
Company's common stock, $.01 par value per share, shall be
available for issuance to Non-Employee Directors under the
Plan. No fractional shares shall be issued.
b. The Initial Option Grants, First Option Grants and Annual
Option Grants shall reduce the shares available for issuance
under the Plan by the number of shares subject thereto. The
shares deliverable upon exercise of any Initial Option Grant,
First Option Grant or Annual Option Grant may be made
available from authorized but unissued shares or shares
reacquired by the Company, including shares purchased in the
open market or in private transactions. If any unexercised
Initial Option Grant, First Option Grant or Annual Option
Grant shall terminate for any reason, the shares subject to,
but not delivered under, such Initial Option Grant, First
Option Grant or Annual Option Grant shall be available for
other First Option Grants or Annual Option Grants.
6. NONSTATUTORY OPTIONS
All Options granted to Non-Employee Directors pursuant to the Plan
shall be NSOs.
7. EXERCISE PRICE
a. The price per share of the shares of the Company's common
stock which may be purchased upon exercise of an Option
("Exercise Price") shall be one hundred percent (100%) of the
Fair Market Value per share on the date the Option is granted
and shall be payable in full at the time the Option is
exercised as follows:
(1) in cash or by certified check,
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(2) by delivery of shares of common stock to the Company
which shall have been owned by the Non-Employee
Director for at least six (6) months and have a Fair
Market Value per share on the date of surrender equal
to the Exercise Price, or
(3) by delivery to the Company of a properly executed
exercise notice together with irrevocable
instructions to a broker to promptly deliver to the
Company from sale or loan proceeds the amount
required to pay the Exercise Price.
b. Such Exercise Price shall be subject to adjustment as provided
in Section 10 hereof.
8. DURATION AND VESTING OF OPTIONS
a. The term of each Option granted to a Non-Employee Director
shall be for five (5) years from the date of grant, unless
terminated earlier pursuant to the provisions of Section 9
hereof.
b. Each Option shall vest and become exercisable six (6) months
after the date of grant.
9. EFFECT OF TERMINATION OF MEMBERSHIP ON THE BOARD
The right to exercise an Option granted to a Non-Employee Director
shall be limited as follows, provided the actual date of exercise is in
no event after the expiration of the term of the Option:
a. If a Non-Employee Director ceases being a director of the
Company for any reason other than the reasons identified in
subparagraph b. of this Section 9, the Non-Employee Director
shall have the right to exercise the Options as follows,
subject to the condition that no Option shall be exercisable
after the expiration of the term of the Option:
(1) If the Non-Employee Director was a member of the
Board of Directors of the Company for five (5) or
more years, all outstanding Options become
immediately exercisable upon the date the
Non-Employee Director ceases being a director. The
Non-Employee Director may exercise the Options for a
period of thirty-six (36) months from the date the
Non-Employee Director ceased being a director,
provided that if the Non-Employee Director dies
before the thirty-six (36) month period has expired,
the Options may be exercised by the Non-Employee
Director's legal representative or any person who
acquires the right to exercise an Option by reason of
the Non-Employee Director's death for a period of
twelve (12) months from the date of the Non-Employee
Director's death.
(2) If the Non-Employee Director was a member of the
Board of Directors of the Company for less than five
(5) years, the Non-Employee Director may exercise the
Options, to the extent they were exercisable at the
date the Non-Employee Director ceases being a member
of the Board, for a period of thirty (30) days
following the date the Non-Employee Director ceased
being a director, provided that, if the Non-Employee
Director dies before the thirty (30) day period has
expired, the Options may be exercised by the
Non-Employee Director's legal representative, or any
person who acquires the right to exercise an Option
by
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reason of the Non-Employee Director's death, for a
period of twelve (12) months from the date of the
Non-Employee Director's death.
(3) If the Non-Employee Director dies while a member of
the Board, the Options, to the extent exercisable by
the Non-Employee Director at the date of death, may
be exercised by the Non-Employee Director's legal
representative, or any person who acquires the right
to exercise an Option by reason of the Non-Employee
Director's death, for a period of twelve(12) months
from the date of the Non-Employee Director's death.
(4) In the event any Option is exercised by the
executors, administrators, legatees, or distributees
of the estate of a deceased optionee, the Company
shall be under no obligation to issue stock
thereunder unless and until the Company is satisfied
that the person or persons exercising the Option are
the duly appointed legal representatives of the
deceased optionee's estate or the proper legatees or
distributees thereof.
b. If a Non-Employee Director ceases being a director of the
Company due to an act of
(1) fraud or intentional misrepresentation or
(2) embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any
Affiliate of the Company or
(3) any other gross or willful misconduct as determined
by the Board, in its sole and conclusive discretion,
all Options granted to such Non-Employee Director shall
immediately be forfeited as of the date of the misconduct.
10. ADJUSTMENTS AND CHANGES IN THE STOCK
a. If there is any change in the common stock of the Company by
reason of any stock dividend, stock split, spin-off, split-up,
merger, consolidation, recapitalization, reclassification,
combination or exchange of shares, or any other similar
corporate event, the aggregate number of shares available
under the Plan, and the number and the Exercise Price of
shares of common stock subject to outstanding Options shall be
appropriately adjusted automatically.
b. No right to purchase fractional shares shall result from any
adjustment in Options pursuant to this Section 10. In case of
any such adjustment, the shares subject to the Option shall be
rounded down to the nearest whole share.
c. Notice of any adjustment shall be given by the Company to each
holder of any Option which shall have been so adjusted and
such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.
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11. EFFECTIVE DATE OF THE PLAN
a. The Plan shall become effective on the later of (1) the date a
registration statement initially registering the Company's
common stock under the Securities Act of 1933 is declared
effective by the Securities and Exchange Commission, or (2)
the date the Plan is approved by the shareholders of the
Company (the "Effective Date").
b. Any amendment to the Plan shall become effective when adopted
by the Board, unless specified otherwise, but no Option
granted under any increase in shares authorized to be issued
under this Plan shall be exercisable until the increase is
approved in the manner prescribed in Section 12 of this Plan.
12. AMENDMENT OF THE PLAN
a. The Board of Directors may amend, suspend or terminate the
Plan at any time, but without shareholder approval, no
amendment shall materially increase the maximum number of
shares which may be issued under the Plan (other than
adjustments pursuant to Section 10 hereof), materially
increase the benefits accruing to Participants under the Plan,
materially modify the requirements as to eligibility for
participation or extend the term of the Plan. Approval of the
shareholders may be obtained, at a meeting of shareholders
duly called and held, by the affirmative vote of a majority of
the holders of the Company's voting stock who are present or
represented by proxy and are entitled to vote on the Plan.
b. It is intended that the Plan meet the requirements of Rule
16b-3 or any successor thereto promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of
1934, as amended, including any applicable requirements
regarding shareholder approval. Amendments to the Plan shall
be subject to approval by the shareholders of the Company to
the extent determined by the Board of Directors to be
necessary to satisfy such requirements as in effect from time
to time.
c. Rights and obligations under any Option granted before any
amendment of this Plan shall not be materially and adversely
affected by amendment of the Plan, except with the consent of
the person who holds the Option, which consent may be obtained
in any manner that the Board or its delegate deems
appropriate.
d. The Board of Directors may not amend the provisions of
Sections 4, 6, 7, 8 and 9 hereof more than once every six (6)
months, other than to comport with changes in the Code, ERISA,
or the rules thereunder.
13. TERMINATION OF THE PLAN
a. The Plan, unless sooner terminated, shall terminate at the end
of ten (10) years from the date the Plan is approved by the
shareholders of the Company. No Option may be granted under
the Plan while the Plan is suspended or after it is
terminated.
b. Rights or obligations under any Option granted while the Plan
is in effect, including the maximum duration and vesting
provisions, shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person
who holds the Option,
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which consent may be obtained in any manner that the Board or
its delegate deems appropriate.
14. REGISTRATION, LISTING, QUALIFICATION, APPROVAL OF STOCK AND OPTIONS
If the Board shall determine, in its discretion, that it is necessary
or desirable that the shares of common stock subject to any Option
a. be registered, listed or qualified on any securities exchange
or under any applicable law, or
b. be approved by any governmental regulatory body, or
c. approved by the shareholders of the Company, as a condition
of, or in connection with, the granting of such Option, or the
issuance or purchase of shares upon exercise of the Option,
then the Option may not be exercised in whole or in part unless such
registration, listing, qualification or approval has been obtained free
of any condition not acceptable to the Board of Directors.
15. NO RIGHT TO OPTION OR AS SHAREHOLDER
a. No Non-Employee Director or other person shall have any claim
or right to be granted an Option under the Plan, except as
expressly provided herein. Neither the Plan nor any action
taken hereunder shall be construed as giving any Non-Employee
Director any right to be retained in the service of the
Company.
b. Neither a Non-Employee Director, the Non-Employee Director's
legal representative, nor any person who acquires the right to
exercise an Option by reason of the Non-Employee Director's
death shall be, or have any of the rights or privileges of, a
shareholder of the Company in respect of any shares of common
stock receivable upon the exercise of any Option granted under
this Plan, in whole or in part, unless and until certificates
for such shares shall have been issued.
16. GOVERNING LAW
The validity, construction, interpretation, administration and effect
of this Plan and any rules, regulations and actions relating to this
Plan will be governed by and construed exclusively in accordance with
the laws of the State of Delaware.
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