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Exhibit 10(iii)
2001 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN OF
FANZ ENTERPRISES, INC.
1. PURPOSE OF THE PLAN. This 2001 Non-Employee Director Stock Option
Plan of FanZ Enterprises, Inc. adopted on this _______ day of ______________,
2001, is intended to encourage directors of the Company who are not officers or
key employees of the Company or any of its Subsidiaries to acquire or increase
their ownership of common stock of the Company. The opportunity so provided is
intended to foster in participants an incentive to put forth maximum effort for
the continued success and growth of the Company and its Subsidiaries, to aid in
retaining individuals who put forth such efforts, and to assist in attracting
the best available individuals to the Company in the future.
2. DEFINITIONS. When used herein, the following terms shall have the
meaning set forth below:
2.1 "BOARD" means the Board of Directors of FanZ Enterprises,
Inc.
2.2 "CHANGE IN CONTROL" means a change in control of the
Company as a result of the occurrence of any of the following events:
(a) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than an Exempt Person (an "Acquiring
Person") is or becomes the beneficial owner, directly or indirectly, of
Shares of the Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding voting
securities, other than either in connection with an issuance of Shares
or series of related issuances of Shares approved by the Board (which
Board must include at least a majority who were Continuing Directors
and which transaction or series of related transactions must have been
approved by a majority of the Continuing Directors) or as the result of
the reduction in the number of issued and outstanding Shares pursuant
to a transaction or series of related transactions approved by the
Board;
(b) there shall cease to be a majority of the Board comprised
of Continuing Directors; or
(c) (i) the Members of the Company approve a merger or
consolidation of the Company with any other entity, other than a merger
or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
more than fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) the
stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets (other than to a more
than fifty percent (50%) subsidiary or other controlled person of the
Company).
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2.3 "CODE" means the Internal Revenue Code of 1986, as in
effect at the time of reference, or any successor revenue code which
may hereafter be adopted in lieu thereof, and any reference to any
specific provisions of the Code shall refer to the corresponding
provisions of the Code as it may hereafter be amended or replaced.
2.4 "COMMITTEE" means the Compensation Committee of the Board
or any other committee appointed by the Board which is invested by the
Board with responsibility for the administration of the Plan.
2.5 "COMPANY" means FanZ Enterprises, Inc.
2.6 "CONTINUING DIRECTOR" means a director of the Company who
is not an Acquiring Person or an affiliate or associate thereof or any
of their representatives and who was either a director of the Company
before any Person became an Acquiring Person or whose nomination or
election to the Board was recommended or approved by a majority of the
then Continuing Directors or by an Exempt Person.
2.7 "DIRECTORS" means directors who serve on the Board and who
are not officers or key employees of the Company or any of its
Subsidiaries.
2.8 "EFFECTIVE DATE" means the date of the closing of the
Company's initial public offering of Shares pursuant to a registration
statement under the Securities Act of 1933, as amended, which has been
filed with, and declared effective by, the Securities and Exchange
Committee.
2.9 "ERISA" means the Employee Retirement Income Security Act
of 1974, as in effect at the time of reference, or any successor law
which may hereafter be adopted in lieu thereof, and any reference to
any specific provisions of ERISA shall refer to the corresponding
provisions of ERISA as it may hereafter be amended or replaced.
2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as in effect at the time of reference, or any successor law which may
hereafter be adopted in lieu thereof, and any reference to any specific
provisions of the Exchange Act shall refer to the corresponding
provisions of the Exchange Act as it may be amended or replaced.
2.11 "EXEMPT PERSON" means the Company, any Subsidiary
thereof, any employee benefit plan of the Company or any Subsidiary
thereof, any entity holding Shares for or pursuant to the terms of any
such plan, and any stockholder as of the close of business on the date
the Plan is adopted by the Board or any affiliate of any such
stockholder.
2.12 "FAIR MARKET VALUE" means with respect to the Shares, the
fair market value determined in good faith by the Committee, in its
discretion, which determination may, but need not, be based on (i) the
advice of an independent financial advisor (which may be the Company's
regular outside auditors) or (ii) the last known price per Share paid
by a purchaser in an arm's length transaction; provided, however, that
if there shall
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be a public market for the Shares, Fair Market Value shall mean (i) the
closing price of the Shares on the principal stock exchange on which
Shares are then traded or admitted to trading, on the last business day
prior to the date on which the value is to be determined, (ii) if no
sale takes place on such day on any such exchange, the average of the
last reported closing bid and asked prices on such day as officially
quoted on any such exchange, or (iii) if the Shares are not then listed
or admitted to trading on any such exchange, the average of the last
reported closing bid and asked prices on such day on the
over-the-counter market. For purposes of (i) above, the National
Association of Securities Dealers National Market System shall be
deemed a principal stock exchange. If there shall be a public market
for the Shares, and the foregoing references are unavailable or
inapplicable, then the Fair Market Value shall be determined on the
basis of the appropriate public market price indicator as determined by
the Committee, in its sole discretion. Notwithstanding the foregoing,
with respect to Options granted on, or as of, the date of the closing
of the Company's initial public offering of Shares pursuant to a
registration statement under the Securities Act of 1933, as amended,
which has been filed with, and declared effective by, the Securities
and Exchange Committee, Fair Market Value means the initial price at
which Shares are sold in such offering.
2.13 "OPTION" means the right to purchase the number of Shares
specified by the Plan at a price and for a term fixed by the Plan, and
subject to such other limitations and restrictions as the Plan and the
Committee imposes.
2.14 "OPTION AGREEMENT" means a written agreement in such form
as may be, from time to time, hereafter approved by the Committee,
which shall be duly executed by the Company and the Director and which
shall set forth the terms and conditions of an Option under the Plan.
2.15 "PLAN" means the 2001 Non-Employee Director Stock Option
Plan of FanZ Enterprises, Inc.
2.16 "QUALIFIED PUBLIC OFFERING" means the sale in an initial
public offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), of the Common Stock of the Company consummated
pursuant to a registration statement declared effective under the
Securities Act, the gross proceeds of which to the Company are at least
Ten Million Dollars ($10,000,000).
2.17 "REGULATION T" means Part 220, chapter II, title 12 of
the Code of Federal Regulations, issued by the Board of Governors of
the Federal Reserve System pursuant to the Exchange Act, as amended
from time to time.
2.18 "RULE 16B-3" means Rule 16b-3 of the General Rules and
Regulations of the Securities and Exchange Commission as in effect at
the time of reference, or any successor rules or regulations which may
hereafter be adopted in lieu thereof, and any reference to any specific
provisions of Rule 16b-3 shall refer to the corresponding provisions of
Rule 16b-3 as it may hereafter be amended or replaced.
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2.19 "SHARES" means shares of the common stock $.01 par value,
of the Company or, if by reason of the adjustment provisions contained
herein, any rights under an Option under the Plan pertain to any other
security, such other security.
2.20 "SUBSIDIARY" or "SUBSIDIARIES" means any corporation or
corporations other than the Company in an unbroken chain of
corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
2.21 "SUCCESSOR" means (i) the legal representative of the
estate of a deceased Director, (ii) the person or persons who shall
acquire the right to exercise or receive an Option by bequest or
inheritance or by reason of the death of the Director or (iii) the
beneficiary or beneficiaries designated by the Director for any Option
granted to the Director which is outstanding at the time of his death.
2.22 "TERM" means the period during which a particular Option
may be exercised.
3. STOCK SUBJECT TO THE PLAN. There will be reserved for use, upon the
exercise of Options to be granted from time to time under the Plan, an aggregate
number of shares equal to 1% of the issued and outstanding Shares upon
completion of a Qualified Public Offering, which Shares may be, in whole or in
part, as the Board shall from time to time determine, authorized but unissued
Shares, or issued Shares which shall have been reacquired by the Company. Any
Shares subject to issuance upon exercise of Options but which are not issued
because of a surrender, lapse, expiration or termination of any such Option
prior to issuance of the Shares shall once again be available for issuance in
satisfaction of Options.
4. ADMINISTRATION OF THE PLAN. The Board shall be invested with the
responsibility for the administration of the Plan; provided, however, that the
Board may appoint a Committee provided, further, however, that at such time, if
ever, that the Company becomes subject to the Exchange Act, the Board shall
appoint a Committee, which shall consist of not less than two (2) outside
directors as defined in Treasury Regulation Section 1.162-27 who shall also
qualify as disinterested directors within the meaning of Rule 16b-3, which shall
be invested with the responsibility for the administration of the Plan; provided
further, however, that the failure to appoint a Committee satisfying the
foregoing requirement shall not affect the validity of any Options granted under
the Plan. Subject to the provisions of the Plan, the Committee shall have full
authority, in its discretion, to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, and generally to interpret
and determine any and all matters whatsoever relating to the administration of
the Plan and the granting of Options hereunder. The Board may, from time to
time, appoint members to the Committee in substitution for or in addition to
members previously appointed and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum. Any action of the Committee
may be taken by a written instrument signed by all of the members, and any
action so taken shall be fully as effective as if it had been taken
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by a vote of a majority of the members at a meeting duly called and held. The
Committee shall make such rules and regulations for the conduct of its business
as it shall deem advisable and shall appoint a Secretary who shall keep minutes
of its meetings and records of all action taken in writing without a meeting. No
member of the Committee shall be liable, in the absence of bad faith, for any
act or omission with respect to his or her service on the Committee.
5. GRANT OF OPTIONS.
5.1 EXISTING DIRECTORS. Each Director who is a Director on the
Effective Date shall be granted an Option to purchase 100 Shares
without further action by the Board or the Committee. On each two year
anniversary of the Effective Date, each Director who (i) was a Director
on the Effective Date and (ii) is still a Director on such anniversary
date shall be granted an Option to purchase 100 Shares without further
action by the Board or the Committee.
5.2 FUTURE DIRECTORS. Each Director who joins the Board after
the Effective Date shall be granted an Option on the first day (the
"Initial Grant Date") of his initial term on the Board to purchase 100
Shares without further action by the Board or the Committee. On each
two year anniversary of the Initial Grant Date of a Director who was
not a Director on the Effective Date, if such Director is still a
Director on such anniversary date, then such Director shall be granted
an Option to purchase 100 Shares without further action of the Board or
the Committee.
5.3 LIMITATIONS. If the number of Shares available to grant
under the Plan on a scheduled date of grant is insufficient to make all
automatic grants required to be made pursuant to the Plan on such date,
then each eligible Director shall receive an Option to purchase a pro
rata number of the remaining Shares available under the Plan; provided
further, however, that if such proration results in fractional Shares,
then such Option shall be rounded down to the nearest number of whole
Shares.
6. BASIC STOCK OPTION PROVISIONS.
6.1 OPTION PRICE. The option price per share of any Option
granted under the Plan shall be the Fair Market Value of the Shares
covered by the Option on the date the Option is granted.
6.2 TERMS OF OPTIONS.
(a) Options granted hereunder shall be exercisable
for a Term of ten (10) years from the date of grant thereof,
but shall be subject to earlier termination as hereinafter
provided.
(b) Except as otherwise provided in the Plan, prior
to its expiration or termination, any Option granted hereunder
may be exercised within the following time limitations:
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(i) After one (1) year from the date of
grant, it may be exercised as to not more than
twenty-five percent (25%) of the Shares originally
subject to the Option.
(ii) After two (2) years from the date of
grant, it may be exercised as to not more than an
aggregate of fifty percent (50%) of the Shares
originally subject to the Option.
(iii) After three (3) years from the date of
grant, it may be exercised as to not more than an
aggregate of seventy-five percent (75%) of the Shares
originally subject to the Option.
(iv) After four (4) years from the date of
grant, it may be exercised as to any part or all of
the Shares originally subject to the Option.
6.3 TERMINATION OF DIRECTORSHIP. In the event a Director ceases to be a
member of the Board (other than by reason of death or disability), then (a) an
Option may be exercised by the Director (to the extent that the Director was
entitled to do so at the termination of his or her directorship) at any time
within three (3) months after he ceases to be a member of the Board, but not
beyond the Term of the Option, (b) the portion of the Option that has not vested
as of the date the Director ceases to be a member of the Board shall
automatically terminate as of the date he ceases to be a member of the Board and
(c) the vested portion of the Option shall automatically terminate upon the
expiration of the three (3) month period described above.
6.4 DEATH OR DISABILITY OF DIRECTOR. If a Director dies or becomes
disabled while he is a member of the Board, or within three (3) months after the
date he ceases to be a member of the Board, then (a) an Option may be exercised
(to the extent the Director shall have been entitled to do so at the time of his
death or disability) in full, by his Successor, in the event of death, or by him
or his personal representative, as the case may be, in the event of disability,
at any time within one (1) year after his or her death or termination of
directorship by reason of disability, but not beyond the Term of the Option, (b)
the portion of the Option that has not vested as of the date of the Director's
death or the termination of his directorship by reason of disability shall
automatically terminate as of such date and (c) the vested portion of the Option
shall automatically terminate upon the expiration of the one (1) year period
described above.
7. EXERCISE OF RIGHTS UNDER AWARDS.
7.1 NOTICE OF EXERCISE. A Director entitled to exercise an
Option may do so by delivery of a written notice to that effect
specifying the number of Shares with respect to which the Option is
being exercised and any other information the Committee may require.
The notice shall be accompanied by payment in full of the purchase
price of any Shares to be purchased, which payment shall be made in
cash or by certificates of Shares held for more than six (6) months,
duly endorsed in blank, equal in value to the purchase price of the
Shares to be purchased based on their Fair Market Value at the time of
exercise or a combination thereof. No Shares shall be issued upon
exercise of an Option
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until full payment has been made therefor. All notices or requests
provided for herein shall be delivered to the Company's President, or
such other person as the Committee may designate. No fractional Shares
shall be issued.
7.2 CASHLESS EXERCISE PROCEDURES. The Company, in its sole
discretion, may establish procedures whereby a Director, subject to the
requirements of Rule 16b-3, Regulation T, federal income tax laws, and
other federal, state and local tax and securities laws, can exercise an
Option or a portion thereof without making a direct payment of the
option price to the Company. If the Company so elects to establish a
cashless exercise program, the Company shall determine, in its sole
discretion, and from time to time, such administrative procedures and
policies as it deems appropriate and such procedures and policies shall
be binding on any Director wishing to utilize the cashless exercise
program.
8. OTHER OPTION TERMS AND CONDITIONS. Each Option or each Option
Agreement evidencing the grant of an Option shall contain such other terms and
conditions not inconsistent herewith as shall be approved by the Committee.
9. RIGHTS OF OPTION HOLDER. Subject to the provisions in Sections 14
and 17 of this Plan, the holder of an Option shall not have any of the rights of
a stockholder with respect to the Shares subject to purchase or receipt under
his Option, except to the extent that the holder has exercised the Option for
those Shares in accordance with the terms of the Option Agreement applicable to
such Option and paid the full exercise price for the purchased Shares to the
Company.
10. NONTRANSFERABILITY OF OPTIONS. Unless otherwise determined by the
Committee and set forth in an Option Agreement, an Option shall not be
transferable, other than: (a) by will or the laws of descent and distribution or
pursuant to any beneficiary designation in effect for said Option at the time of
the holder's death, and an Option may be exercised, during the lifetime of the
holder of the Option, only by the holder, or in the event of death, the holder's
Successor, or in the event of disability, the holder's personal representative,
or (b) pursuant to a qualified domestic relation order, as defined in the Code
or ERISA or the rules thereunder.
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11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes
in all of the outstanding Shares by reason of stock dividends, stock splits,
reclassifications, recapitalizations, mergers, consolidations, combinations,
exchanges of shares, separations, reorganizations or liquidations, or similar
events, or in the event of extraordinary cash or non-cash dividends being
declared with respect to the Shares, or similar transactions or events, the
number and class of Shares available under the Plan in the aggregate, the number
and class of Shares subject to Options theretofore granted, applicable purchase
prices and all other applicable provisions, shall, subject to the provisions of
the Plan, be equitably adjusted by the Committee (which adjustment may, but need
not, include payment to the holder of an Option, in cash or in shares, in an
amount equal to the difference between the price at which such Option may be
exercised and the then current fair market value of the Shares subject to such
Option) as equitably determined by the Committee in order to prevent the
diminution or enlargement of benefits thereunder. The foregoing adjustment and
the manner of application of the foregoing provisions shall be determined by the
Committee, in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an
Option.
12. CHANGE IN CONTROL. Notwithstanding anything to the contrary herein
or in any Option Agreement, in the case of a Change in Control of the Company,
each Option granted under the Plan shall terminate upon the later of (i) the
thirtieth (30th) day after the date the Option holder receives written notice
from the Company of such Change in Control or (ii) the consummation of such
Change in Control, and an Option holder shall have the right, conditioned upon
the consummation of such Change in Control and subject to any other limitation
on exercise of an Option in effect on the date of exercise, to exercise any
Option in full, without regard to any vesting limitations, to the extent it
shall not have been previously exercised.
13. FORMS OF OPTIONS. An Option shall be granted hereunder on the date
or dates specified in the Plan. Whenever the Plan provides for the receipt of an
Option by a Director, the Company's President or such other person as the
Committee shall appoint, shall forthwith send notice thereof to the Director, in
such form as the Committee shall approve, stating the number of Shares subject
to the Option, its Term, and the other terms and conditions thereof. The notice
shall be accompanied by a written Option Agreement, in such form as may from
time to time hereafter be approved by the Committee, which shall have been duly
executed by or on behalf of the Company. Execution by the Director to whom such
Option is granted of said Option Agreement in accordance with the provisions set
forth in this Plan shall be a condition precedent to the exercise of any Option.
14. TAXES.
14.1 RIGHT TO WITHHOLD REQUIRED TAXES. The Company shall have
the right to require a person entitled to receive Shares pursuant to
the exercise of an Option under the Plan to pay the Company the amount
of any taxes which the Company is or will be required to withhold, if
any, with respect to such Shares before the certificate for such Shares
is delivered pursuant to the Option. Furthermore, the Company may elect
to deduct such taxes from any other amounts then payable in cash or in
shares or from any other amounts payable any time thereafter to the
Director.
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14.2 DIRECTOR ELECTION TO WITHHOLD SHARES. A Director may
satisfy the withholding tax liability, if any, with respect to the
exercise of an Option, by having the Company withhold Shares otherwise
issuable upon exercise of the Option if such Director makes an election
to do so which satisfies the requirements of Rule 16b-3.
15. TERMINATION OF THE PLAN. The Plan shall terminate ten (10) years
from the date the Plan becomes effective, and an Option shall not be granted
under the Plan after that date although the terms of any Option may be amended
at any date prior to the end of its Term in accordance with the Plan. Any Option
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms and conditions of the Option and this Plan.
16. AMENDMENT OF THE PLAN. The Plan may be amended at any time and from
time to time by the Board, but no amendment without the approval of the
stockholders of the Company shall be made if stockholder approval under Rule
16b-3 would be required. Notwithstanding the discretionary authority granted to
the Committee in Section 4 of the Plan, no amendment of the Plan or any Option
granted under the Plan shall impair any of the rights of any holder, without the
holder's consent, under any Option theretofore granted under the Plan.
17. DELIVERY OF SHARES ON EXERCISE. Delivery of certificates for Shares
pursuant to an Option exercise may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
applicable requirements of any federal, state or local law or regulation or any
administrative or quasi-administrative requirement applicable to the sale,
issuance, distribution or delivery of such Shares. The Committee may, in its
sole discretion, require a Director to furnish the Company with appropriate
representations and a written investment letter prior to the exercise of an
Option or the delivery of any Shares pursuant thereto.
18. FEES AND COSTS. The Company shall pay all original issue taxes on
the exercise of any Option granted under the Plan and all other fees and
expenses necessarily incurred by the Company in connection therewith.
19. EFFECTIVENESS OF THE PLAN. The Plan shall become effective on the
Effective Date.
20. OTHER PROVISIONS. As used in the Plan, and in Option Agreements and
other documents prepared in implementation of the Plan, references to the
masculine pronoun shall be deemed to refer to the feminine or neuter, and
references in the singular or the plural shall refer to the plural or the
singular, as the identity of the person or persons or entity or entities being
referred to may require. The captions used in the Plan and in such Option
Agreements and other documents prepared in implementation of the Plan are for
convenience only and shall not affect the meaning of any provision hereof or
thereof.
21. DELAWARE LAW TO GOVERN. This Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
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